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Author: 



Phillips, John Burton 



Title: 



Freight rates and 
manufactures in Colorado 

Place: 

Boulder 

Date: 

1909 



91'^^)SP'l 



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Phillips, John. Burton, 1866- 
• Freight rates and manufactures in Coloradof 
a cliapter in edonomio history, by John Biirton 
Phillips... Boulder, Col., 1909 • 
62 p. tables. 27 cm. 

Reprint from the University of Colorado 
Studies, Deoenber 1909 • 



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MAIN ENTRY: Phillips. John Burton 



Freight rates and manufactures in Colorado 



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Freight Rates and Manufactures 

in Colorado 







f 



A Chapter in Economic History 



By 
JOHN BURTON PHILLIPS, Ph.D, 

Professor of Economics and Sociology 
in the University of Colorado 





LIBRARY 
SCHOOL OF BUSINESS 



Reprint from the 

University of Colorado Studies, December 1909, 

Boulder, Colorado 



X 



3,p- 






LIBRA A Y 
SCHOOL OF BUSINE 






FREIGHT RATES AND MANUFACTURES IN 
COLORADO: A CHAPTER IN 
ECONOMIC HISTORY 



By John Burton Phillips 



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CONTENTS 

Chapter I. Introduction ^^^^ 

Denver as a Distributing Centre 9 

Importance of Long Haul 9 

Dependence of Rocky Mountain Region on Railroads 9 

Power of Railroad Manager '° 

Interest of Railroad Manager in Dividends i® 

Carrying Industry Desires Haulage ......••• 'o 

Localization of Manufactures in East Increases Haulage . . . . lo 

Manufactures in East; Raw Material Production in West . . . . ii 

Transportation Companies' Interest in This Condition . . . . n 

Population Moves West More Rapidly than Manufactures . . . . n 

Heaviest Denver Shippers Formulated First Schedule of Freight Rates . ii 

This Schedule Accepted by Railroad i^ 

Industrial Characteristics of Mining Population m 

Beginning of Local Manufacture '3 

Complaints against tiie Freight Rates I3 

Legislative Investigation of 1885 ^4 

Chapter 11. Testxmqny of Manufacturers and Merchants 

p^Ag^ _Paper-Mill Project Defeated by Threat to Lower Rates . . 15 

' Saddlery.— R&te on Raw Material Higher than on Manufactured Goods . 15 
Freight Rate Lower from East through Denver to California than to 

Denver ^ 

Lower Rates to Cheyenne and Ogden than to Denver .... 17 

Whip Manufacture Discouraged by High Rates 18 

Evils of RaUroad Pool 18 

5 



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UNIVERSITY OF COLORADO STUDIES 

Alleged Railroad Freight Inspector ^ 

Rebating System and Its Effects 

Matefe«.-Manufacture Begun but Discouraged by Rates ' * * ' '° 
Monopoly of Diamond Match Company 

5aa/>— Rates Discouraged Maunfacture 

Kirk and Company's Monopoly 

Iron -Eariy Development of Iron Manufacture Needed in Mining Region . 22 
Freight Rates Same on Raw Material and Manufactured Articles . 23 
Discrimination against Denver as Distributing Point .... 25 

p^^._Reduction in Price after Erection of Denver Mill . . . .27 
Combination of DuPont Monopoly with Railroads 27 

Ghss -Railroad Threat to Lower Rate on Incoming Glass .... 28 
Operation of Factory Raised Denver Rates to Tributary Pomts . . 29 

Carm^«.-Rate on Materials Higher than on Manufactured Article . 30 
Building Material and Furniture. Boxes. Brooms.-?.^i^ Same on 

Unfinished and Fmished Furniture . . • • • • -31 

Rate on Mattresses Favored Manufacturer at Missouri River . . 33 

Cemen/ ami Terra Co/to.-Difficulty m Distribution of Product ... 34 

Grocm«.— Table of Discriminatory Rates 3^ 

Coo/ Mining.— Complaints of Coal Mine Operators . . ' ^ 

Railroads Engaged m Coal Mining 39 

Monopoly Price Discouraged New Manufacturers 4 

Chapter HI. Testimony of Railroad Officials 

Santa Fe Discriminated against Goods Made in Colorado . . . • 4i 

Hieher Rates from Denver than from Missouri River . • • ' ' ^^ 

Rio Grande Favored Colorado Consumer Rather than Manufacturer 42 

Nail Rate Reduced to Favor Colorado Coal and Iron Co. ... 43 

Origin of Colorado Coal and Iron Co. Railroad Assistance ^^. . 44 

Attitude of Union Pacific * xe 

Pressure on Railroads by Eastern Manufacturers . . • • v, 45 
Letter of Pool Commissioner Promising Aid to Manufacturers . . 4^ 

Chapter IV. 1885-1896 

Law Creating Railroad Commissioner and Its Repeal -49 

Complaints against Freight Rates by Presidents of Denver Chamber of ^^ 
Commerce 



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FREIGHT RATES AND MAGUFACTURFS IF COLORADO 7 

Freight Rate Attack on Paper-Mill 5° 

Resolution of Citizens' League against Freight Rates 5^ 

Table of Commodity Rates to Colorado and California .... 52 

Table of Commodity Rates, California to Colorado and Missouri River . 54 

Table of Distributive Rates from Colorado 54 

Discrimination in Favor of Missouri River Points 55 

Peculiarities of Rate Discrimination 5" 

Difficulties of Colorado Jobbers 57 

Discrimination against Mattress Manufacture 59 

Discrimination agamst Iron Manufacture in Pueblo 60 

Inter-State Commerce Commission's Order to Reduce Rate on Iron . . 61 

Commission's Order Vacated by United States Circuit Court ... 61 

Failure of Denver to Secure Missouri River Commodity Rates ... 61 



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FREIGHT RATES AND MANUFACTURES IN 

COLORADO 

Chapter I. Introduction 

The geographical situation of the city oiE Denver and its function as 
the distributing centre of the Rocky Mountain region have made the 
question of transportation of paramount importance. Denver is i,ooo 
miles from Chicago and i,8oo from San Francisco. It is also about 
1,000 miles from the Gulf points and 1,700 from Seattle. From Missouri 
River points the distance is 600 miles. It thus appears that the city 
is the only largely populated centre within a vast territory. Further, 
the entire region between the Missouri River and the Rocky Mountains 
is not densely populated. Local traffic is therefore not important 
and the feature that has appeared most decisive to the railroad companies 
has always been the long haul. When the Pacific Railroad was opened 
in 1867, it was supposed that Cheyenne would be the future metropolis 
of the Rocky Mountain region and little attention was paid by the rail- 
roads to the thought of building a road from the Union Pacific southward 
to Denver, then a town of some 4,000 inhabitants. It must be remem- 
bered that the gold craze which was so powerful a factor in filling Colo- 
rado with population in the years immediately following 1859 had spent 
its force and thousands of the disappointed gold hunters had returned 
to their homes in the east. 

The men who had stayed in Colorado knew the value of the region 
as a mining state and, with a thorough belief in the future, sought to 
secure railroad connection with the outside world. They began at once 
to raise the funds necessary for building a railroad from Cheyenne to 
Denver, and after many disappointments and difficulties, the road was 
opened for trafl&c on June 22, 1870. The road was built purely by local 
enterj)rise. By September of the same year another railroad, the Kansas 
Pacific, reached the city and thus Denver had satisfactory communica- 
tion with the outside world and by two different routes. 

The history of no city shows more clearly the immense power of the 
railroad managers over the growth and development not only of cities 

9 



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UNIVERSITY OF COLORADO STUDIES 



but also of large sections of the country. As already indicated the geo- 
graphical situation of the city and the country tributary to it were in 
great degree absolutely dependent upon the freight rate for any reason- 
able growth. Water communication which has guaranteed fair rates 
to so many places didjiot exist; navigation of the air was not possible; 
haulage by wagon was so expensive that it was prohibitory for all except 
the most valuable kinds of freight. The Rocky Mountain region was 
therefore absolutely dependent upon the mercies of the railroad manager. 
The history of railroading in the United States shows clearly enough 
that the railroad manager is guided in his action by the interests of the 
men that own the railroad. The men that build and operate a railroad 
are entitled to make a profit out of their work and hence it happens that 
the manager is primarily interested in what dividends he is able to secure. 
Railroads are built for the purpose of hauling commodities primarily 
and anything that tends to make communities self-sufficient and thus 
eliminate the need of transporting goods to them is not likely to receive 
aid and support from the men who have invested their money in and 
are devoting their energies to railroads. If each community in the 
United States began in considerable measure to manufacture the things 
that are consumed in that particular section, and if the raw materials 
of manufacture were not required to be hauled in, it is at once apparent 
that there would be some diminution in the amount of freight carried by 
the railroads that are now serving these places in the capacity of carriers. 
It is therefore to the interest of the carrying industry that manufactures 
should not spread over all sections of the United States. IiLlhe railroad 
manager's point of view, it is more to his financial interest to have manu- 
factures largely localized in the eastern part of the country and to keep 
the West engaged in the production of raw materials. By accomplishing 
this, he will be able to furnish enormous traffic for the carrying industry. 
He will haul the manufactured goods from the East to the raw material 
producing regions of the West and vice versa. This will greatly increase 
his profits as long as the industries remain thus localized. This brings 
to mind the navigation laws of the seventeenth century and the prohibi- 
tion of manufactures that preceded the revolutionary war. The interest 
of the mother country was to keep the colonies raw material producing 




FREIGHT RATES AND MANUFACTURES IN COLORADO 



II 



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4. 



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regions, and in modern times the East and the railways have had the 
same interest in preventing the growth of manufactures in the western 
states. That this interest has been in some degree effective appears 
by a study of the increase of population and the movement of manufac- 
tures toward the West in the United States. 

From 1850 when the domestic system of manufacture gave way to 
the factory, the progress of manufacture toward the West has not kept 
pace with the westward movement of population. In 1850, the centre 
of manufactures was a little south of the middle of Pennsylvania, slightly 
north and west of Harrisburg, while the centre of population was just west 
of the eastern boundary line of Maryland, being thus considerably east 
of the centre of manufactures. By 1900, the centre of population had 
moved westward to a point almost south of Indianapolis while the centre 
of manufactures was a little east of a line from Columbus to Toledo. 
During the same period manufactures increased from $1,000,000,000 
in 1850 to $13,000,000,000 in 1900. This shows a marked concentration 
in the manufacturing industry. 

On June 23, 1870, the next day after the first locomotive arrived in 

Denver, there was a meeting of the heaviest shippers to consider the 

matter of freight rates. On the following day another meeting of the 

same persons was held and a schedule of rates was agreed upon. This 

schedule was presented to the superintendent of the railroad who replied 

on June 28 as follows: 

Denver Pacific Railway 
Superintendent's Office 

Denver Colo., June 28, 1870 
Fred. Z. Solomon, Esq., Chairman Business Men's Meeting, Denver, Colo. 

Sir: The proceedings of the meetings of the heaviest shippers of this place, 
held in this city June 23 and 24, were handed me by your secretary, Mr. McDonald. 
The recommendatioi.s of the meetings were presented by me to the proper railroad 
officials, and the rates proposed by your meetings for carrying freights have been 
adopted and will be published in a few days. These rates will apply to all freight 
which has come into Denver over the Denver Pacific Railway since June 25, and 
if any other rate has been paid, the matter will be properly adjusted upon applica- 
tion to me at this office. 

Very respectfully, 

Your obedient servant, 

C. W. Fisher, 

Supt. D. P. R. R. 



13 



UNIVERSITY OF COLORADO STUDIES 



. 



In reply to this the committee having the matter in charge adopted 
the following resolution: 

Resolved, That the reply of Col. Fisher to the request of the shippers of Denver 
relative to freight tariff over the road of which he is suj)erintendent is perfectly 
satisfactory, and our thanks are due for the prompt and cheerful compliance with 
our request. ^^^ ^ Solomon, Chairman. 

F. A. McDonald, Secretary. 

After publishing this correspondence, the editor of the Colorado 
DaUy Tribune remarked that this was an auspicious beginning as it 
proved that the railroad company and the merchants were dwelling 
together in unity. He thought this was a forerunner of what might be 

expected in the future.' 

It is true that this looked like an auspicious beginning but there were 
certain conditions that made it to the interest of the railroads apparendy 
to keep the prices for transporting freight to Colorado high. The roads 
had been built in advance of the needs of the time. There was no popu- 
lation along Jieir line to furnish them with any business. If their stock 
w^^Tto'b^me a't all valuable, they must do their utmost to secure as 
large a revenue as possible from all shippers who patronized them. 
Therefore, there was every inducement for them to raise the rates and 
keep them high. There was also the inducement to keep new manufac- 
tures from locating in Colorado so as to supply the home market. This 
would reduce the revenue of the roads from hauling in freight. 

There was also another cause operating to prevent freight rates favor- 
able to the establishment of manufactures and that was the leading 
occupation of the country. Manufacturing is a routine industry; it 
takes time and patience and does not furnish the opportunity to " strike 
1 it rich" suddenly. Wealth made in manufacturing comes slowly as 
the result of years of patient attention and devotion to the details of the 
business and to the development of a large market by advertising and 
so forth This industry, therefore, requires a different type of mind from 
that needed in such an industry as mining. After the railroad had 
reached Denver, the people that came for the next ten years or more were 
very largely persons interested in one way or another in the mmmg 

1 Coloradc DaUy Tribune, June 29. 1870. 




FREIGHT RATES AND MANUFACTURES IN COLORADO 



13 



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development of the state. They did not come to Colorado for the pur- 
pose of starting a manufacturing plant. In fact, the rewards from the 
mining industry had become sufficiently well known to make most of the 
migrating population turn their energies in that direction rather than 
pay much attention to the establishment of manufactures. The persons, 
then, that came to the state in the earlier decades were persons of the 
adventurous type of mind and not persons accustomed to the monotonous 
routine of workaday industry. A population of this sort largely engaged / 
in the mining industry expects that everything will be high. A mining 
region is accustomed to pay high prices for all things as the rewards ; 
of industry in the search for gold are apt to be high and this increases 
the cost of all other things as workers in other lines must be paid as much 
as the average returns of the gold seeker. If they are not so paid they ^ 
will also engage in the search for the precious metals. 

This was the situation in Colorado for the first decade and more \ 
after the railroad reached Denver. Mining was the leading occupation. 
No one was paying much attention to manufacturing; the returns from 
mining were sufiiciently large to make that the paramount industry, j 
Therefore the few manufacturing concerns which did start were soon i 
disposed of by the adjustment of discriminatory rates on the part of the 
railroad companies. After the factories started, the rates were lowered 
so that goods could be brought in from the East more cheaply than they 
could be produced in Denver. This matter did not attract any par- 
ticular attention during the early period as mining was occupying too 
prominent a place. As Denver increased in population, however, and 
it was seen that it was destined to be one of the large cities of the country, 
and as it also became apparent that the cheaper forms of mining were no 
longer efficient, then it was evident that manufacturing in Colorado 
would be an advantage to the city and state. Therefore, public atten- 
tion began to be directed toward whatever hindrances there were to the 
development of this important industry. The freight rate difficulty 
was at once complained of. Discussion of the injustice which it was 
alleged the city and state were suffering at the hands of the railroads was 
carried on in the newspapers and in January, 1885, the legislature, 
almost immediately after convening, appointed a special railroad com- 




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UNIVERSITY OF COLORADO STUDIES 



mittee of the house of representatives to investigate the freight rate situa- 
tion and ascertain if possible whether or not the railroads were unfavorable 
to the establishment of manufactures in Colorado. This committee 
occupied several weeks in examining witnesses, both shippers and rail- 
road agents and officers, in an honest endeavor to ascertain the facts of 
the existing situation and also the attitude of the railroads toward the 
establishment of manufacturing industries in Colorado. Much impor- 
tant testimony was taken and great light was thereby thrown upon many 
phases of the question. From this testimony important data bearing 
on the relation of the freight rate to manufactures has been summarized 
below. 




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Chapter II. Testimony of Manufacturers and Merchants 

Paper 
In 1884, a plan was matured to build a paper-mill in Denver. Mr. 
Woodworth, a gentleman who was familiar with the manufacture of 
paper in the East and who had been spending the summer in Colorado, 
saw the possibilities in the manufacture of paper in the city and decided 
to set up a mill. He convinced some of the local capitalists that the 
enterprise would pay. A lot was selected and he went East to buy the 
necessary machinery. The capital of the establishment was to be 
$250,000. When the railroad officials learned of the scheme they 
informed Mr. Woodworth that in case a paper-mill was started in Denver 
they would put the freight rates on incoming paper so low that he could 
not afford to manufacture.^ 

Saddlery and Hardware 
Mr. E. B. Light who was engaged in the saddlery business in Denver 
in 1885 explained to the committee the effect of the freight rates on 
leather manufacture. It appears from his testimony that the rate on 
raw material was generally higher than on manufactured goods. There 
was at that time a combination in the saddlery hardware business and 
the trust would lay down the same hardware any place east of the Mis- 
sissippi River at the same price. The dealer at the River got the goods 
therefore at the price paid by the dealer in Newark, N. J. The freight 
on one hundred dollars worth of such hardware from the Missouri River 
to Denver was about one fourth of the value, so that the Denver dealer 
had to pay $125 for what the dealer at the River secured for $100. ^ The 
same rate on raw and manufactured goods was a loss to the railroad 
according to Mr. Light as the amount of money invested in a harness if 
invested in the raw material and this shipped in from the River would 
yield a large amount in freight as the raw material was three or four 
times as heavy as the finished product. This was true of either leather 

» Evidence, Special Railroad Committee, pp. 13, 14, 1885. 
« Ibid., p. 84, 1885. 

IS 






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UNIVERSITY OF COLORADO STUDIES 






or saddlery hardware. From the railroad point of view, however, 
cheaper rates on raw materials might have tended strongly to encourage 
the growth of manufacture in Denver, and ultimately make for the self- 
sufficiency of the region. This might mean less freight in the future. 

At this time Mr. Light's concern had travelers making the towns in 
Texas, New Mexico, Arizona, Kansas, Nebraska, Idaho, Montana, 
and they had gone even as far as Hailey, Oregon. The goods sold over 
this large territory were certain specialties that were well adapted to the 
uses of this particular region. The competition which these agents 
encountered was particularly with the California dealers. Goods could 
be shipped from the East to the California houses more cheaply than 
they could be shipped to Denver. The goods thus went through to the 
Pacific points cheaper than they could be stopped off at Denver. In 
this way the San Francisco dealer could get into Idaho and other parts 
of the West and undersell the Denver man. Goods were thus carried 
across the continent and then shipped back again to the points reached 
by the San Francisco trade. It was the custom of Mr. Light's firm to 
sell to certain dealers in various parts of the states above mentioned and 
have the goods shipped directly from the factory to the dealer as the rate 
would have greatly raised the price had the goods been shipped via 
Denver. This was considered bad business by the wholesaler as it was 
said to bring the manufacturer and the dealer into closer relations and 
in the course of time the dealer would buy directly from the eastern 
manufacturer, and the Denver jobber's trade would disappear. 

In 1883, Mr. Light had a drummer in Texas who found he could 
sell a large quantity of wooden stirrups that were made in Ohio. By 
bringing them in south of the pool lines and getting them to Fort Worth, 
they could be handled for $1 . 10 a hundred. Bringing them to Denver 
and shipping them thence to Fort Worth would cost $5 . 10. Mr. Light 
presented the case to the freight agent of the Santa Fe explaining that he 
could handle a large amount of these stirrups and asking if the railroad 
would not give the same rate on them as was then given on wooden ware, 
namely $0.60 a hundred. The agent said he would write to the head 
office at Topeka and find out about the matter. Before this time Mr. 
Light's concern had been called the Denver Whip and Collar Company, 




FREIGHT RATES AND MANUFACTURES IN COLORADO 



17 



* ': ( 






but the name had recently been changed to the Denver Manufacturing 
Company. When this was explained to the agent he said, "The name 
will kill this thing because you are manufacturers."' 

Mr. Light asked to be allowed to ship in carload lots and then asked 
if they would make him a special rate on what he shipped south of 
Emporia which was a pool point. The railroad would then get a haul 
to Denver and half way back to Kansas City and none of the goods would 
be sold in the territory of the pooled roads. This proposition v/as de- 
clined on the ground, according to the statement of the freight agent of 
the company, that Mr. Light was a manufacturer. The reply from 
Topeka was unfavorable as had been anticipated. 

As an indication of the policy of the railroads toward the development 
of manufactures in the Rocky Mountain region at this time the following 
incident is worth noting. Mr. Light bought a carload of blankets 
in Philadelphia in 1884. The freight on these blankets was $175 from 
Philadelphia. Of this amount the cost of freight from Philadelphia 
to Chicago was $45, and from Chicago to Denver, $130. For the first 
half of the journey the freight was one fourth of the total, the second 
half, from Chicago to Denver, three fourths of the total freight cost.^ 

The efforts of the Union Pacific to build up Cheyenne and interfere 
with the progress of Denver which had been the policy of that railroad 
in the early days lasted till some time previous to 1885 and the rates 
enjoyed by the merchants in that town were much more favorable than 
the rates granted to the Denver dealers. Goods shipped to Georgetown 
and Central City came via Cheyenne. The Union Pacific would not 
make the same rate to Denver as it was a pool point and Cheyenne was 
not. If goods were shipped to Denver the Union Pacific would get only 
one fourth of the freight, but if shipped to Cheyenne, this road would 
get all. Such a condition prevented the increase of manufacture and trade 
in Denver. If the Union Pacific hauled to Denver, it would get one 
fourth of the freight, but if it hauled to Ogden, it would get all the freight. 
This condition accounts for the lower rates from the Missouri River to 
Ogden and Salt Lake than to Denver. 

Mr. Light formerly manufactured whips in Westfield, Massachusetts. 



"i'- 



Evidence, Special Railroad Committee, p. 83. 



• Ibid., p. 84. 



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UNIVERSITY OF COLORADO STUDIES 



He told the committee that he could make whips more cheaply in Denver. 
This was because factory workers were cheap in Colorado as so many per- 
sons had come out from the East in search of health and while they were 
not fitted to do the heavy work of the building trades or mines, were never- 
theless able to do the lighter work of the factories.^ He also stated that 
there was no reason why he should not make whips in Denver and sell 
them to the entire tributary country save only the adverse railroad rates. 
He had previously had considerable trade in Trinidad but of late it 
had greatly fallen off. The merchants there said that they could get 
the goods more cheaply by shipping them in from the East than they could 
get them from Denver. 

The general conditions in Denver in 1885 were not encouraging to 
the manufacturing industries. Such industries were at that time declin- 
ing according to testimony before the special railroad committee. The 
cause of this decline was said to be the railroad pool. The discrimi- 
natory rates against Denver and in favor of Cheyenne, Ogden and Salt 
Lake, are evidence of the injury to the manufacturing interests of 
Denver wrought by the pool. It was affirmed before the committee that 
in the days when there was only the old Kansas Pacific to bring in the 
goods from the Missouri River, it was possible to have the commodities 
come in more reasonably than in 1885 when the city had four railroads. 
It was charged that the classification of freight was almost constantly 
changed and the rates raised in this way every time the trafl&c would 
bear a higher charge. The railroad companies were said to have had 
an inspector at the freight house whose business it was to open boxes 
and ascertain if freight was properly classified. If a few first class 
articles were found in a box of mixed freight the whole box was charged 
up as first class freight. The railroads regarded it as smuggling.* 
This was especially the case in the matter of saddlery. If ten dollars 
worth of harness rosettes were placed in a $300 box of saddlery hard- 
ware, the whole shipment would be put up to first class rates, that being 
the class to which harness rosettes belonged. In the East harness rosettes 
were third class freight.^ 

' Evidence, Special Railroad CommiUee, p. 84. 

» Ibid., p. 85. Improper freight classification is a serious fraud practiced on railroads. An inspector 
may have been necessary. See Report of the United States Industrial Commission, Vol. IX, p. 288, 1902. 
J Ibid., p. 84, 1885. 




FREIGHT RATES AND MANUFACTURES IN COLORADO 



19 




These various railway practices were not without their effect on the 
business of the city. It was stated to the legislative committee that in 
1885, 25 per cent, less mechanics were employed than was the case two 
years before. The number of men in the iron industries was also 
reduced in the same proportion. Nothwithstanding these conditions, 
many of the business men, especially wholesalers, were at that time 
friendly to the railroads. The rebating system was then in force and 
as many of these persons were in the habit of receiving rebates which 
enabled them to thrive while their competitors were worsted, they natu- 
rally remained friendly to the railroad companies. A canner of vegetables 
agreed to sell to wholesalers as cheaply as they could buy in the East 
plus the freight. They greatly astonished him by the information that 
15 per cent, of the freight should be deducted as this was their rebate. 
It is said that several of the merchants wanted high rates so they could 
profit by the rebate they were then getting and at the same time be pro- 
tected from the competition of new firms that, were it not for this dis- 
crimination, might be induced to start business in the city. Rebating 
was then carried on in other cities of the state besides Denver; Mr. 
Light told the committee that a merchant in Leadville showed him a 
check for $2,000, that being his rebate during a certain period.' 

Freight rates were so adjusted at this time that the Denver merchants 
and manufacturers could not get into the market at Cheyenne, save only 
in those cases in which the dealers of the latter city wished their goods 
sent with great dispatch. In such cases the road would make a rate that 
would allow the Denver dealer to sell his goods in Cheyenne. Ex-Gover- 
nor Alva Adams, president of the board of trade at Pueblo, stated in an 
address that nails made by the Colorado Coal and Iron Company if 
shipped to El Paso paid a rate of fifty cents a keg. If these nails were 
bought in the East and shipped to Pueblo, the freight would be twenty- 
five cents a keg. If they were reshipped at Pueblo and sent to El Paso, 
the freight to that point would be twenty-five cents more. It thus appears 
that at that time the manufacturer of nails in Pueblo paid the 'same rate 
as the eastern manufacturer whenever he wished to ship to points in 
what might be called country tributary to his manufactory.* 




' Ibid., p. 84. 



'Ibid. 



FREIGHT RATES AND MANUFACTURES IN COLORADO 



21 



20 



UNIVERSITY OF COLORADO STUDIES 




Matches 
Mr. James D. Davis began the manufacture of matches in Denver 
in 1883 He started with a capital of four or five thousand dollars and 
product from twenty-five to thirty gross a day. When the factory 
first started, matches could be sold to the merchants at $2 . 50 a gross, but 
he had to sell them very soon at $1 . 50 in order to keep his trade, as the 
rates were reduced on matches brought in from the East. When the 
factory began operations, the freight rate on matches was $3.60 a hun- 
dred Very soon after that it was reduced to $2 . 60 a hundred, and still 
laterit became the practice to classify matches as wooden ware, and thus 
classified the rate was one dollar a hundred. When the factory was 
started the profit was thirty-five to fifty cents a gross on the manufacture 
of matches at the Denver factory, but after the profit had declined to five 
or ten cents in consequence of the reductions in freight rates, it was not 
profitable to keep the factory running and it accordingly closed down 

ini885.' ^_ ..r J I, f 

One of the prominent merchants of the city of Denver testified before 

the committee that there was a general break in the rate in the year 1884, 
and that aside from matches, soap and other commodities were afiFected. 
That this rate war was purely a railroad contest is hard to prove. It 
appears from evidence before the same committee that Kirk and Company 
were trying to starve out the small manufacturers of soap at this time. 
It is also true that the Diamond Match Company had a monopoly more 
or less complete of the match manufacture of the United States. 
$27 000,000 worth of matches was manufactured in 1883, and of this 
amount $22,000,000 was made by the Diamond Match Company. It 
is easy to believe that so large a shipper as the Diamond Match Com- 
pany might have some power in the matter of dictating the rate to be 
charged by the railroads. After the winter of 1884, the rates on matches 
and other commodities were again raised. The match factory had then 

gone out of business.* 

Soap 
A soap factory was established in Denver in 1876. In the beginning 
the factory was somewhat handicapped by the railroads as the freight 



• Evidence, Special RaUroad Committee, pp. 22, 23, 133. i39- 



' Ibid., p. 133' 






'J^C 



tVi 



( 



•■ II ■• 



rates on the raw material for the manufacture of soap were the same as 
the rates charged for bringing in soap. The factory was able to make 
a large product but experienced the greatest difficulty in marketmg it as 
the rates were so made by the railroads as to favor the long haul. At 
this time there were four roads in the pool and the division on a carload 
of freight hauled from the River to Colorado points would be more than 
that resulting from a car of soap shipped from Denver to Las Vegas, 
or other points in the neighboring territory. ■ After the factory had been 
running for three or four months and had turned out a soap that would 
toke the market, the freight rate was changed. When the factory was 
opened, the rate on soap from the Missouri River to Denver was one 
dollar a hundred pounds and the rate from Chicago to the River was 
forty cents a hundred. This $1 .40 rate to Denver was lowered as soon 
as the factory appeared to be successful to 60 cents a hundred pound 

About 1880 another soap factory was started in Denver. Some time 
after it had been in operation, the rates on soap from the East were low- 
ered and a great fall in the price occurred. This was the current report 
in Denver at the time of the investigation by the legislative committee 
and a number of witnesses testified before the committee. It was the 
custom to buy the soap that was shipped into Denver with the freight 
prepaid and this tended to surround the matter with more mystery and 
lend color to the suspicion that the report was true. At any rate the 
factory had gone out of business. ^ 

The evidence taken by the committee shows that the freight rate, 
as in the case of the factory in 1876, was the same on soap and soda 
although one car of soda would make many cars of soap. It appeared 
that there were good opportunities for the manufacture of soap in Denver. 
It was stated by witnesses before the committee that the price of grease 
in Denver was lower than it was in the East. 

The rate on soap from the Missouri River to Denver was maintained 
rigidly and honestly from November i, 1882, to February 28, 1884. 
On the latter date rate cutting was begun and one cut followed another 
till the rates were 30 or 40 per cent, of the published freight tariff, 



» Ibid., pp. 43. 218. 



• Ibid., p. 131. 








=^ 



22 



UNIVERSITY OF COLORADO STUDIES 



FREIGHT RATES AND MANUFACTURES IN COLORADO 



Chicago to Denver. On August i, 1884, the rates were restored and 
the plan of the railroad companies was to exact from all shippers the 
same rate. It was found, however, that Kirk and Company had a con- 
tract which ran till the end of the year by which one of the railroads 
running from Chicago to Council Bluffs agreed to ship their soap below 
the published tariff. Over this railroad the Union Pacific had no 
control. After the expiration of this contract Kirk and Company had 
to pay the same rate as anybody else. It was the practice of Kirk and 
Company to sell soap in Denver and Salt Lake as cheaply as in Chicago 
as they wished to break up the manufacture of soap in the West. In 
this the committee was told Kirk and Company were usually successful. 
In case the soap makers of the West were not ruined by this competi- 
tion, they were at least made sufficiently tractable to make a contract 
according to which the profits were divided and a share given to Kirk 
and Company. In 1885, there were very few soap factories between the 
Missouri River and the Pacific Ocean.'' 

Iron 
Of all manufactures, that of iron is the most important and its devel- 
opment usually takes place first in order of time in all places where such 
industry attains much magnitude. The attitude therefore of the govern- 
ment or of those in control of the forces affecting the iron industry toward 
the manufacture of iron is a clear indication as to whether or not it is 
desired to make that particular section a manufacturing centre. In this 
respect, the attitude of the railroads is important as showing their desire 
for manufacturing to develop in any particular place. They constitute 
certain powerful causes in aid of or injury to manufactures, and it is 
only necessary to ascertain whether or not they make the freight rate so 
as to discriminate against the infant manufacturing industry struggling 
to get started in the newer points reached by the road. The attitude of 
the railroads therefore toward the growth of the iron manufacture at any 
point is an indication of their general attitude toward the development 
of the other manufacturing industries at that place. What was the atti- 
tude of the transportation companies toward the iron industry in Denver 
and Colorado generally in the earlier period ? 

' Evidence, Special Railroad Committee, p. 225. 



23 



¥ 







n. 



(' 



Aside from any interference on the part of the railroads, the natural 
situation of the state of Colorado and the nature of the industry that was 
first developed in the state, namely, mining, are conditions that would 
of necessity have started the iron industry at an early date. Heavy iron 
machinery was greatly needed in working the mines. Such machinery 
is expensive to bring in from points i,ooo miles distant as its weight adds 
greatly to the difficulty in transporting it and freight rates must of neces- 
sity be very high. In 1881-82, just after the great mining successes at 
Leadville, there was a great influx of mining machinery. It was shipped 
from points beyond the Missouri River, much of it from places as far 
distant as Pittsburgh, and the average rate of freight was said to have 
been ten cents a pound. ^ Thisjv£aS-Ai3L.£ii Qrmous tax on^ the mi ning 
industry of the state. There can be little doubt that this great dem^and 
for the products of iron manufacture would have stimulated the develop- 
ment of that industry very rapidly, had it not been for the discriminating 
freight rates. 

The foundry business was started in Denver in 1871. It was handi- 
capped by the rates for the shipment of its products. The freight rates 
from Denver to points in Arizona, Montana and southern California 
were the same as from Missouri River points. The foundry shipped in 
pig iron and coke from the East as these were superior in quality to any 
made in Colorado at that time. The freight rate on these products was 
fifteen dollars a ton.^ 

The freight rates were not favorable to the manufacturer of foundry 
products then nor did they become so soon. The discrimination in 
favor of the places on the Missouri River continued. The rates were 
kept as high on the raw material needed for use in iron manufacture as 
on the manufactured product. It cost as much in every case except that 
of pig iron to bring in the raw materials as it did the manufactured 
machines. This is especially illustrated by the rate on boilers. On 
30 per cent, of the material in boilers, the rate was higher than the rate 
on the manufactured boiler. The rate on the boiler tubes was $1.15; 
on the finished boiler, the rate was $1.00.^ Six firms were engaged in 
the manufacture of boilers in 1884. The price of boilers was high enough 



« Ibid., p. 166. 



» Ibid., p. 51. 



3 Ibid., p. 166. 




»s*-- v 



24 



UNIVERSITY OF COLORADO STUDIES 



FREIGHT RATES AND MANUFACTURES EST COLORADO 



25 



to encourage their manufacture in Colorado if the railroads would have 
been willing to change their classification of freight so as not to discrimi- 
nate against the growth of the manufacture. Most of the boilers made in 
Colorado at this time were made from scrap iron.' If the freight rate 
on boiler iron had been reduced to 75 cents a hundred, it was said before 
the committee that the boilers made in Colorado would have been equal 
to the demand in that state. It was also stated that this lowering of the 
rate on boiler iron would have had a great effect in developing mining in 
the state. In 1881-82 when there seemed for a tim.e to be a prospect 
favoring the growth of this industry, the Colorado Iron Works employed 
from 150 to 300 men.* 

Mr. James W. Nesmith, the president of the Colorado Iron Works, 
testified before the committee in verification of the testimony already 
given by other witnesses concerning the discrimination against the 
development of the iron industry in Colorado. He said it did not pay 
to manufacture boilers in Colorado as the freight on boilers was at that 
time less than the freight on the iron from which boilers were made and 
this iron would have to be shipped in from Pittsburgh. Boilers from 
the same point could be brought in for less money. To make the boilers 
in Colorado would have cost as much more as the labor put into the 
manufacture of them was worth. Mr. Nesmith testified that this discrim- 
ination had always existed. There was a rate war beginning June 2, 
1884, when for a time there was a difference of twenty-five cents between 
the freight rates on raw and manufactured iron. The Colorado Iron 
Works did not manufacture more than S3 per cent, of the boilers which 
they might manufacture were it not for the discriminating freight tariff. 
The five or six iron manufacturing concerns in Denver in 1885 had all 
dropped out of the business of making boilers on account of the unfavor- 
able freight rate, and had devoted themselves to the manufacture of 
other things. At that time $1,000,000 was invested in the various 
machine shops of the city, all of which could engage in the manufacture 
of boilers were it not for the rate against them. These various shops had 
a capacity to employ 1,200 men, but owing to the unfavorable attitude 
of the railroads toward the development of manufactures in the state, 




^ 



these shops were not then and had not been for a year employing more 
than 150 men. Had there been no rate discrimination, Colorado would 
have made all the mining machinery needed in the state. However, 
at that time and with all the shops ready, Denver did not produce more 
than 25 per cent, of the mining machinery needed in the country tribu- 
tary to it. It was stated that if there had been at that time the same 
discrimination between manufactured articles and raw iron as there had 
been between pig and manufactured iron, the iron manufacture would 
have developed rapidly in Denver. The rate on pig iron from the Missouri 
River was fifty cents a hundred; on bar iron $1 .00. If the bar iron was 
boxed to go into machinery, the rate was sixty cents a hundred. ' There 
was a discrimination also against Denver as a distributing point for 
manufactured articles. The rate from Denver to Wood River was the 
same as the rate from Omaha and other Missouri River points to Wood 
River, though the distance was several times as great.* 

It was brought out in the testimony before the committee that the 
Santa Fe charged about 40 per cent, higher rates on freight from Denver 
to New Mexico points than was charged shippers bringing in their goods 
from eastern points. As an illustration of this Mr. Davis, a manufacturer 
of boilers and engines, related to the committee the following incident: 
He sold a hoisting outfit, boiler and engine, to a person who desired them 
to be shipped to Los Cerillos, New Mexico. After the bargain had been 
concluded, other dealers in boilers and engines who were handling goods 
shipped in from the East offered the purchaser of Mr. Davis' machinery 
the same goods at a cheaper price. The purchaser stuck to his bargain. 
Mr. Davis went to see about the freight rate on the outfit to the destina- 
tion in New Mexico. Before stating the rate, the freight agent asked 
Mr. Davis where the goods were made. When he was told they were 
made in Denver, the freight rate announced was considerably higher 
than the rate from Denver to New Mexico charged commodities that 
were shipped in and jobbed from Denver. Mr. Davis next tried to ship 
this outfit through a firm that had a special agreement with the Santa 
Fe, Jensen, Bliss and Company. " I went to Mr. Bliss and asked him 
if he would ship it, he said he would and asked what it was; I told him 



« Evidence, Special Railroad CommiUee, p. 169. 



' Ibid., p. 168. 



* Ibid., p. 4. 



Ibid. 




^ 




i 



26 



UNIVERSITY OF COLORADO STUDIES 



FREIGHT RATES AND MANUFACTURES IN COLORADO 



27 






I 






an engine and boiler; he said, 1 can't ship that; it would burst my 
arrangements up;' he said he had a special contract with them to ship 
his goods at a special rate but they must be goods shipped in here."^ 
This transaction occurred some time previous to January, 1885. Mr. 
Da\is began the preparation of a lawsuit against the Santa Fe on account 
of this discrimination maintained by it, but found that at that time there 
was no existing law against it. 

Another foundry had started in 1880, but failed as the rates were 
so high that coal, coke and pig iron could not be brought in to enable 
the manufacturer to compete with machinery brought in from the 

East.* 

Ini 883, the Union Pacific began a fight against the Colorado Coal 

and Iron Company by lowering the rates on manufactured iron goods. 

The cut began in Utah and by September 11, had extended to Colorado. 

This cut affected the company disastrously.^ 

The same situation confronted other iron industries as was the case 

with the boiler manufacture. In a new country that was doing so much 

development work as was being done in Colorado in the decade from 
1880 to 1890, much iron to be used in bridges was needed. The roads 
were being improved in all directions and this meant a great need of 
bridges. Iron had been found to be the best material of which bridges 
shoidd be made and it was therefore natural to expect the development 
in the state of certain bridge manufacturing plants. This did not occur 
as the rate on bridge iron brought in from the eastern manufactories 
was so adjusted that the eastern manufacturer could make the bridges 
and ship them to the Rocky Mountain region more cheaply than they 
could be made in Colorado. As late as 1884, no iron bridge had ever 
been made in Colorado. The freight on the raw bridge iron from the 
Missouri River was $1 .00 per hundred weight, while the freight on the 
finished bridge was only seventy-five cents. The iron manufacturers 
stated that twenty-five cents a hundred was a very large profit.^ It is 
thus very clear that as long as this condition prevailed, bridges would 
continue to be made east of the Missouri River and shipped to Colorado. 



» Evidence, Special Railroad Cammiitee, p. 78. 
■ Ibid., p. 50. 



3 Ibid., p. 218. 

4 Ibid., p. 168. 






^k' 



.» 1 



< 



v> 




Powder 

Some years previous to 1884, a company was formed for the manu- 
facture of powder in Denver. Much of this article was then used in 
the mining operations in the districts tributary to that city and it occurred 
to the men promoting the company that the cost of transporting it to 
Colorado from the East might be saved if its manufacture was begun in 
Denver. The company secured a patent by which it was claimed that 
powder could be made for nine cents a pound cheaper than it was then 
made in the East. The mill was accordingly started. At that time the 
price of powder was thirty-seven or thirty-eight cents a pound. Immedi- 
ately after the factory was in operation, the price was put down to twenty 
cents a pound for powder brought from the East to Denver. It cost 
more than twenty cents a pound to manufacture powder at the Denver 
mill. The mill was operated for about six months when the lower 
prices of powder from the East made it apparent to the stockholders that 
the enterprise was not likely to be in condition to pay any dividends and 
the mill was accordingly closed. The stockholders sold out for about 
35 cents on the dollar, losing about $20,000 of the cost of the plant. 

It is said that DuPont did not want the mill in Denver to manufacture 
powder. He wanted the powder to be made in his mills in the East. 
Mr. Bosworth, who was superintendent of the mill, told the conmiittee 
that he understood there was a rebate given by the railroad companies 
as powder was sold in Colorado during the time the mill was in operation 
for less than it could be made in the East.^ 

Just after the Denver factory had started and when the price had 
been put down, the president of the company, Henry R. Wolcott, went 
East to investigate the low price of powder. He found that powder 
making in the East was in the hands of the DuPont monopoly, and that 
this monopoly in combination with the railroads was too strong for the 
Denver firm. By lowering the freight rates to Colorado and also the 
price at which powder was sold in the state, and by recouping itself by 
higher rates and prices elsewhere, the combine could give away all the 
powder used in Colorado and still not lose. When this state of afifairs was 
understood, it was felt by the stockholders that it was idle to fight the 

» Ibid., p. 66. 



. ( 



28 



UNIVERSITY OF COLORADO STUDIES 



^ 



I 



collusion of the railroads and the trust and although the Denver plant 
was one of the finest, it was sold out to DuPont at his own figures.' 

Some interesting light is shed on this matter by the testimony of the 
general freight agent of the Union Pacific Railroad. This agent, Mr. 
Shelby, stated that his company had had nothing to do with the destruc- 
tion of the powder-mill. His railroad wanted to go out of the business 
of transporting high explosives and desired to foster their manufacture 
in Colorado. To this other roads having terminals in Colorado objected 
and believed that their interests lay in the transportation of powder to 
Colorado. The Union Pacific went out of the business of transporting 
powder for a time and the other roads charged a high tarifiF for carrying 
it. Mr. Shelby did not think the rate was lowered for the purpose of 
destroying the powder factory in Denver. He thought the case was 
more like the case of the soap factory mentioned above. Kirk wanted 
to monopolize the manufacture of soap and did so. So with the DuPont 
powder company; they would give away powder in Colorado rather than 
let the factory produce it in the state.* 

Glass 

The glass industry encountered similar opposition to that which 
confronted the others already described. It is an industry that tends 
to establish itself as near as may be to the localities where it is consumed 
in large quantities as the commodity is one that is liable to loss from 
breakage resulting from shipment. Thus with the growth of Denver 
and the cities of Colorado, there was an impetus given to the establish- 
ment of glass industries. According to statements by the Denver dealers, 
during the ten months ending November i, 1881, $281,000 worth of 
glass was sold in Denver. Mr. Burdsall came to the conclusion that 
this manufacture might be carried on profitably there as all the materials 
needed in making it were to be found in Colorado and not distant from 
the city. He intended to utilize the soda lakes near Morrison from which 
an abundance of soda could be easily brought to Denver. He discussed 
the matter with the Union Pacific ofl&cials and found that the freight on 
the incoming glass was a considerable item in the income of that railroad, 

» Evidence, Special Railroad Committee, p. 64. * Ibid., p. 343. 




FREIGHT RATES AND MANUFACTURES IN COLORADO 



29 



.f 



amounting to not less than $100,000 for the preceding ten months. Mr. 
Burdsall also discussed with the railroad officials the matter of bringing 
in soda from Morrison and establishing a glass factory in Denver; they 
told him that if his company started a factory in Denver, they would put 
the freight rate on glass from the East down to nothing so as to kill his 
company's business.^ They charged Mr. Burdsall $14 a car to ship 
some soda, silica, kaolin and so forth from Morrison to Denver. Lime 
and other products for the Grant Smelter were brought to Denver from 
the same place for seven dollars a car. The materials near Morrison 
were so abundant that if the rate from there to Denver could be lowered, 
glass and sulphate of soda could be made in Denver and sold in the 
country tributary to that city in defiance of anything the railroads could 
do. At the prevailing rate east, the product might be shipped to the 
Missouri River and sold there.* 

The general freight agent of the Union Pacific, Mr. Shelby, told the 
committee that the rates on silica, soda etc. were not fourteen dollars 
a car if several cars a day were shipped. He said lower rates were not 
given the Grant Smelter.^ The explanation would seem to be that the 
Grant Smelter was at that time consuming enough of the material to 
get a cheaper rate in consequence of larger shipments. Mr. Shelby 
also stated that at that time the Union Pacific would be glad to encourage 
a glass factory in Denver and would haul in the materials at as low a 
rate as four cents a hundred as it was then (1885) doing for the glass 
factory that had recently started.^ 

Mr. John P. Epley began the manufacture of glass in Denver in 1884. 
His factory turned out bottles only. These he attempted to sell in the 
territory tributary to Denver, but had encountered difficulties. He 
received an order for bottles to be shipped to a point east of Denver on 
the Burlington, but as soon as the customer ascertained what the freight 
would be, he canceled the order. The freight rate for bottles made in 
Denver and shipped to points in the territory adjacent was too high to 
allow such manufacture to develop. After the factory had been started, 
the freight rates on bottles from the East were lowered. In consequence, 



' Ibid., p. 147- 
» Ibid., p. 149- 



3 Ibid., p. 248. 
*Ibid. 



i 




30 



UNIVERSITY OF COLORADO STUDIES 



the price of the bottles made in Denver had to be lowered to meet the 
competition and hold the customers which the new factory had secured 
in Denver. None of the materials used in the manufacture of bottles 
by this factory were brought in from the East. The soda was brought 
from Wyoming. When this glass company attempted to extend its 
trade to the southern part of Colorado, territory served by the Santa Fe 
railroad, it encountered difficulties as the freight rate from Denver to 
the points in this territory had been raised during the year 1884 and just 
after the glass factory had started. ^ 

Carriages 

The difficulties which the manufacturer of carriages suffered on 
account of the arrangement of the freight rates were related to the inves- 
tigating committee of the legislature by Mr. D. K. Wall, a carriage 
manufacturer who was employing from fifteen to twenty-five men in 
his factory in 1885. Mr. Wall stated that the freight rate on carriages 
partly finished in the white as it is called was the same as the rate on the 
finished product. Carriages made in Colorado were said by this manu- 
facturer to be superior to those made in the East owing to the greater 
dryness of the atmosphere and the fact that the timber would in conse- 
quence be so much better seasoned. Mr. Wall thought carriage manu- 
facture could be carried on as well in Denver as anywhere as it is the 
custom for all carriage manufactories to have certain parts used in the 
manufacture shipped in from points all over the United States. The 
rate on carriages from the Missouri River at that time was $1.37^ a 
hundred weight, the same as the rate on carriage wheels in the white 
or other parts of the vehicle. He stated that if rates were proportioned 
according to the value of the article, carriages would be made in Denver 
at a very good profit. Many laborers had come out to Colorado for 
their health and unable to do heavy work would be very happy to find 
work such as is required in a carriage factory and which they would be 
able to perform successfully.* 

Another carriage manufacturer employing from fifteen to twenty- 
five men confirmed the testimony of Mr. Wall, stating that everything that 



« Evidence, Special Railroad Committee, p. 55. 



• Ibid., p. 157. 




FREIGHT RATES AND MANUFACTURES IN COLORADO 



31 



goes into a carriage is charged at a higher freight rate than the finished 
carriage when that is shipped from the East. This manufacturer, Mr. 
Melburn, stated that in 1883 he had asked that the rates on all the things 
that go to make a wagon, wheels, springs, carriage bolts etc. be so ad- 
justed that they would be the same as the rate on manufactured wagons. 
This the railroad officials refused and said the articles could be classi- 
fied only after their arrival here. The rates were such that the freight 
on a car of finished wagons from the Missouri River to Denver would 
cost $200, but the car of parts of wagons from the Missouri River would 
have to pay freight amounting to $365. The manufacturer stated that 
four carriage wheels in raw material ironed cost $17 . 40, but when painted 
and ready for the wagon they were worth $32, the difference being 
due to the additional labor put on them. If the freight on this $17.40 
of raw material were in the same proportion to the value of the material 
as the freight on the manufactured article was to its value, carriages 
could be made in Denver and the Denver manufacturers would control 
the trade. Their profits would be increased about 10 per cent., said 
Mr. Melburn. It seems that at that time the carriages made in Colorado 
would sell for a little more than those shipped from the East.' 

An interesting light is thrown on the carriage trade by the testimony 
of this manufacturer. It seems that when he began the manufacture 
of wagons in 1877, vehicles made in Colorado were not in demand, but 
by 1884 the preference was given to the wagons that were made in the 
state. It was estimated at that time that the wagons made in the state 
would last 20 per cent, longer because of the better seasoning of the 
timber put into them, due, of course, to the dryness of the climate. A 
lowering of the rates would enable him to employ in his factory 300 more 
hands. At that time not more than 125 men were employed in this kind 
of manufacture in the entire city. The witness stated that the employ- 
ment of 300 more men would mean a difference in the population of the 
city of from 1,500 to 2,000.* 

Building Material and Furniture 

The freight rates had their effect on the manufacture of the higher 
grades of building material and furniture. Sash, doors and blinds 



^Ibid. 



• Ibid., p. 157. 




32 



UNIVERSITY OF COLORADO STUDIES 



FREIGHT RATES AND MANUFACTURES IN COLORADO 



33 



I 



i 



made in Denver could not be marketed north of the Union Pacific nor 
south of the Santa Fe. One of the prominent lumber dealers in Denver 
stated that in 1882 he could make doors and started in the business but 
the Chicago firms got the rates lowered so that in 1885, doors could not 
be made in Colorado. In 1885, the rate on glazed sash from the Missouri 
River to Colorado common points was seventy-five cents; on window glass 
the freight rate from the River was one dollar. Therefore glazing could 
not well be done in Denver. At that time only odd sizes of sash and the 
like were made in the city. These sizes did not compete with the product 
shipped in from the East and the manufacturer was therefore allowed 
to sell them north of the Union Pacific railroad. His market could not 
be extended to the towns within a short distance of Denver such as Long- 
mont, Colorado Springs or Pueblo. The freight rate on such goods 
from the East to these points was the same as the rate from Denver.' 

Mr. Henry C. Taussig, a manufacturer of packing-boxes, stated that 
the freight rate on such boxes complete in the knock-down shape from 
the Missouri River to Colorado points was the same as the rate on the 
rough lumber of which such boxes were made. There was also consid- 
erable waste in the manufacture of these boxes. Mr. Taussig stated 
that this rate was special to certain dealers in the city. Some makers 
of crackers and soap were getting their boxes from the East in 1885. 
The rate had not recently been lowered, but the classification of packing- 
boxes had been changed. He could not sell to the soap factory in Pueblo 
as the rate from Kansas City to Pueblo was the same as the rate from 
Kansas City to Denver. The rate on lumber from the mountains of 
Colorado about 75 miles distant was $1.65 a hundred weight, while 
the rate on lumber from Kansas City, 600 miles, was fifty cents. =" 

A broom factory was started in Denver in 1880. The market was 
mostly local owing to the imfavorable freight rates from the East as 
compared with the rates from the Denver manufactory. Brooms were 
shipped from various points between the Missouri River and Denver 
to points in the Mountains at $40 a car. The rate on brooms shipped 
from the Denver factory to the same points in the Mountains was $130 to 
$150 a car. Manufactured brooms were also shipped from the Missouri 



' ^ 



*i^- 



>"♦ 



River to Denver at the same rate as raw material. Brooms were classi- 
fied as wooden and willow ware, the same as raw material. It cost more 
at that time to ship a carload of broom handles from the River to Denver 
than it cost to ship a carload of brooms.' Mr. Shelby, freight agent of 
the Union Pacific, said that these rates would be modified so as to give 
the Denver broom manufacturer a market from 100 to 200 miles east of 
the city.^ 

A furniture dealer who had also been engaged in the manufacture of 
mattresses stated that he had had to abandon their manufacture on 
account of the unfavorable freight rate on goods brought in from the 
East. Rates on materials from which mattresses are made were $1 . 05 
from the Missouri River to Colorado. After the manufacture had 
begun in Denver, the rate on these materials was advanced to $1.45. 
Then the firm ceased to manufacture and bought the mattresses in the 
East. Mr. Gartner, the manufacturer, stated that the rates on the raw 
material for upholstered goods were the same as for the finished article. 
Mr. Stewart, another manufacturer of mattresses, confirmed what Mr. 
Gartner had said and added other interesting items. He had begun 
the manufacture of mattresses in 1881 and soon found that the freight 
rates were unfavorable to the extension of his market over territory 
south of Denver. Freight rates to New Mexican points had been raised 
after the factory started. Formerly the rate on mattresses from Denver 
to Las Vegas was $1.55; in 1885, it was $2 . 80. The old rate to Albu- 
querque was $2.15; in 1885, it was $3 . 80. Until 1884 or 1885, the rates 
from Denver to points in New Mexico were higher than the rates from 
the Missouri River to these points. This, of course, did not encourage 
the growth of his market. The freight rate on bed springs was lower 
than the rate on the raw wire of which these bed springs were 

made.^ 

The freight rate on chairs in knock-down condition was the same 
as the rate on chairs set up and finished if shipped in carload lots. Look- 
ing glass plates were charged the same freight rate as finished looking 
glasses, and all furniture, whether in the raw or finished condition, paid 



» Evidence, Special Railroad ComtniUee, pp. 73, 79. 81. 



» Ihid., p. 33. 



» Ihid., p. 39. 
» Ibid., p. 8s. 



» Ibid., p. 28. 



» 



/ 



34 



UNIVERSITY OF COLORADO STUDIES 



the same rate.^ Labor was higher in Colorado and without a consider- 
able difference in the raw and manufactured goods, furniture could not 
be finished in Denver.^ 

Cement and Terra Cotta 

Fire brick, cement and terra cotta works in Denver had each similar 
experiences to those of the other industries already mentioned. The 
fire brick company could not enlarge its market on account of the unfa- 
vorable freight rates. The cost of manufacturing this commodity in 
Denver was somewhat higher than at the Missouri River points as the 
coal had to be hauled in and labor was higher. After the article was 
manufactured, however, the rates from Denver to points in Idaho and 
Montana were the same as the rate to those points from places on the 
Missouri River.^ This condition confined the fire brick made in Denver 
to the local market. 

Much the same condition confronted the manufacturers of cement 
in Denver in the years preceding 1885. The firm could not sell its 
product in Salt Lake as the rate from Denver to Salt Lake was about 
the same as the rate from the Missouri River to Salt Lake and hence, 
the manufacturer at the River who could produce more cheaply had 
the advantage over the Denver manufacturer. The freight rate from 
Denver to Albuquerque was the same as the rate from the Missouri 
River to the same point. This was true generally of the rates to points 
in Mexico. In 1885, the freight rate on cement from Denver to Chey- 
enne was lower than the rate from the River to that point but the Denver 
company could not sell cement in Cheyenne. Mr. Evans, the secretary 
of the company, stated that he thought the merchants in Cheyenne were 
getting rel ates at that time, and that the public schedule did not obtain. 
He said his company had nearly closed a contract for three cars in that 
city, but the Union Pacific learned of it and cut the freight rate so that 
the company lost the contract and the cement was hauled from the Mis- 
souri River. After the factory had been started in Denver, the freight 
rate on cement from the Missouri River to Denver was greatiy lowered, 
whether to injure the factory or not the secretary said he did not know.^ 

The terra cotta stone works were built in 1881 and the product was 

« Evidence, Special Railroad Committee, p. 91. ' Ibid., p. 142. * Ibid., p. 35. * Ibid., p. 4a. 



J 




^- 



f 



< 



.f> 



FREIGHT RATES AND MANUFACTURES IN COLORADO 



35 



soon more than sufficient to supply the local market. The owner, Mr. 
Moulton, sought to sell his surplus in Salt Lake. He found to his 
astonishment that the freight rate on a car of his products from Denver 
to Salt Lake was $75 more than the rate on the same products from the 
Missouri River to Salt Lake. Eastern firms at Akron, Ohio, Peoria, 
111., and Des Moines, Iowa, were then competing in the Denver market. 
Since Mr. Moulton's factory was started, the freight rate from the 
Missouri River to Denver had been greatly lowered. He stated that 
if the rates had remained the same as they were when his factory began 
operations, he would be able to compete with eastern manufacturers. 
The rate then existing on terra cotta products from Denver to Salt 
Lake was $250 a car. The rate from Omaha to Salt Lake on the same 
products was $175 a car. This effectually shut out Denver from the 
market in Salt Lak . Seventy-five dollars a car was a handsome profit 
according to the testimony of the Denver manufacturer.' 

Groceries 

The grocery business was so discriminated against by the freight 
rate that Denver could not become a distributing point for the Rocky 
Mountain country. It was stated in the evidence before the railroad 
committee, that the Kansas Pacific Railroad was capitalized at $250,000 
a mile which sum was vastly beyond the cost of constructing it, and that 
in consequence of this great capitalization, it was the desire of the rail- 
road company to secure all the returns in freight that could possibly 
be obtained. The same was more or less true of the capitalization of 
the other railroads that at that time terminated in Denver or other parts 
of the state. It was alleged that the railroads expected the people to 
pay interest on this enormous capitalization, and hence the high r tes 
for everything carried into the state. Mr. Shelby, general freight agent 
of the Union Pacific, stated that during the preceding year, the Union 
Pacific fell short of paying expenses and interest on bonds by $623,299.* 
It was also charged by Mr. Martin, a wholesale grocer, that the goods 
shipped to Colorado were frequently overweighed. He had brought 
a suit against the railroad company on this charge and had won the suit.^ 




» Ibid., p. 171. 



• Ibid., p. 240. 



3 Ibid., p. 61. 



f 11 



i 



^5 UNIVERSITY OF COLORADO STUDIES 

The following table of freight rates on the various groceries shows 
very clearly the discrimination in that business:* 

CANNED GOODS 

California to Boston $i • 25 

California to Cheyenne i • 20 

California to Atchison 125 

California to Denver i • 7© 

DRIED FRUITS 

California to Chicago i 85 

California to Denver 2.60 

RAISINS 

California to Missouri River i 50 

California to Denver 2.50 

NUTS 

California to Chicago 180 

California to Denver 2.50 

BEANS 

California to Chicago i-5o 

California to St. Louis i -So 

California to Cincinnati i -S^ 

California to Denver i-7o 

COFFEE AND RICE 

California to Missouri River i • 16 

CaUfomia to Denver i • 7© 

FRUITS AND VEGETABLES (CAR LOTS) 

California to Chicago 1-25 

California to Denver 1-75 

California to Denver (less car lots) 3So 

SUGAR 

California to Kansas City i.oo 

California to Denver i • 4© 

RICE 

CaUfomia to Kansas City 100 

California to Denver ^ • 4© 

By this table it appears that all staple groceries that came from Cali- 
fornia to Denver were charged at a higher rate of freight than if they 

* 
« Evidence, Special Railroad CommiUee, p. 60. 




FREIGHT RATES AND MANUFACTURES IN COLORADO 



37 




f 



went on through to the Missouri River or Chicago. As a general rule, 
all fifth class goods which consisted of groceries were hauled from Cali- 
fornia to the Missouri River points for one dollar, but to Denver, six 
hundred miles shorter haul, the rate was $1.50. Green fruits shipped 
from California to Denver paid a rate of two cents a pound, but if shipped 
through to the Missouri River, New York or Chicago, th^ rate was one 
cent a pound.' A number of wholesale grocers confirmed this testi- 
mony.^ Isaac Brinker, a retired grocer, bought syrup in California 
and shipped it to the Missouri River and then back from the River to 
Denver in order to get the advantage of the lower freight rate.^ Mr. 
Wolfe Londoner, one of the wholesalers of Denver, stated that the rail- 
road pool was a great injury to the business interests of the city. The 
rates were so arranged as to favor shipping in manufactured goods. 
He had lost his trade at Trinidad, Colorado Springs and Grand Junction, 
on account of the discrimination against Denver as a distributing point. 
The freight rate from Chicago to Salt Lake injured the trade of the Den- 
ver wholesalers and destroyed the trade with Grand Junction. It was 
hard for the wholesalers to live at that time as the rates were so unfavor- 
able. Merchants in Georgetown and other points in the interior of the 
state could get the same rate as the Denver wholesaler and as a conse- 
quence, they ceased buying from the Denver house and bought directly 
from the firms in the East or elsewhere.^ It was impossible to ship 
groceries to Utah from Colorado. California competed with the East. 
Canned goods, coffee, rice, dried fruit, liquors, cigars, machinery and nails 
were hauled from California to Utah because these all came to Cali- 
fornia by water and at a very low rates. They had been shipped from 
California to points in Utah at as low as thirty-five cents a hundred 
weight. This is why the freight rate on nails from Pittsburgh to Cali- 
fornia was. sixty-five cents a hundred. s 

In explaining why fifth class freight was carried from California 
to Chicago and Omaha more cheaply than to Denver, Mr. Shelby, 
general freight agent of the Union Pacific, said that there was water 

« Ibid., p. 243. Mr. Shelby, general freight agent of the Union Pacific, said this was not true in 1885. 
• Ihid., pp. 133, 97. " ^^^" PP- ^39, 140. 

3/6«i..p. III. s/Wrf.,p. 199. 



.^ 



i'^HMI 



38 



UNIVERSITY OF COLORADO STUDIES 



competition at these points and there was no water competition at 
Denver. These articles were shipped around Cape Horn.^ 

Coal Mining 

It appears also that the business of coal mining upon which the 
growth of manufacturing industry depends was not greatly encouraged 
by the railroads. Various witnesses before the committee testified to 
discriminations of difiFerent kinds which interfered with the profitable 
conduct of the business. Mr. Langford who was at that time operating 
the Marshall Mine about sixteen miles from Denver stated that the 
freight rate on coal from the mine to Denver was $1.25 a ton. The 
Louisville Mine was operated by the Union Coal Company and was 
two miles farther from Denver than the Marshall Mine, but the rate on 
coal from the Louisville Mine to Denver was only twenty -five cents a 
ton. This was denied by the general freight agent of the Union Pacific 
who said the Union Coal Company was a department of the Union Pacific 
Railroad.* The directors and stockholders of the Louisville Mine were 
the same as the largest stockholders in the Union Pacific Railroad 
Company.^ Mr. Goodrich who was mining coal at Erie confirmed the 
testimony of Mr. Langford. He stated that he was obliged to pay $1 . 00 a 
ton to get his coal from Erie to Denver, and that he could not sell in the 
Mountains nor south of Denver as the freight rate was discriminatory.^ 

The sale of Colorado coal outside of the state was not encouraged by 
the railroads. A Denver dealer got orders for coal at places in 
Kansas. The Union Pacific quoted him a rate of $3.50 a ton for 
the shipment of coal to these points. A traveler had been sent out and 
had worked up considerable trade. Three cars were sent over the Union 
Pacific. Then an order came to receive no more cars, and the shipper 
had to abandon the attempt to sell in Kansas. Coal was at that time 
being mined in Gunnison County and shipped to Denver ready for the 
markets in Kansas and Nebraska. The coal came over the Rio Grande. 
The Union Pacific raised the freight rate for hauling coal to points in 
the states east of Colorado to $10.00 a ton. The officials of the Union 




FREIGHT RATES AND MANUFACTURES IN COLORADO 



39 



Pacific said they were not receiving any freight from the Rio Grande at 
that time. A similar case happened with the Santa Fe. As soon as it 
was learned that the coal came from Colorado, a prohibitory tariff 

was fixed. ^ 

It is stated in the report of the railroad commissioner for the year 
1885 that the price of coal was exhorbitantly high to the consumers in 
many parts of the state. This was due to the large profits secured by 
the dealers and not to any extreme cost of production. It appeared that 
the dealers in many instances had been able to secure a monopoly of 
the business through connivance with the railroad companies. Dis- 
crimination had, therefore, become so common that it became a settled 
conviction in the public mind that a coal measure in the state was without 
value unless owned by or in connection with a railroad company, and that 
the transportation companies controlled the price of the entire product. 
Whether or not this was true, the report does not say." 

The explanation of the railroads being engaged in the business of 
coal mining is, however, not without great interest because of the light 
it throws on the development of manufactures in the state. When 
the railroads reached Colorado in the summer and fall of 1870, a demand 
for coal was created. The consumption by the railroads was more than 
the mines could produce with their equipment at that time. Hence, 
the era of railroads created a demand for the investment of more capital 
in the coal mining business. This capital was not furnished by private 
parties as their wealth was invested in the mining of precious metals. 
The Colorado immigrant of the earlier decade came for the purpose of 
mining gold and not coal. His relation to the coal mining industry was 
that of consumer rather than producer. If the railroads had not engaged 
at that time in the mining of coal, it is quite possible that their excessive 
demands on the small amount of private capital invested in the business 
would have added a scarcity value to the product. It was on this account 
that the railroad ownership and operation of coal mines was not in the 
earlier decades considered a serious menace to the welfare of the state.^ 
The commissioner of railroads stated that as private enterprise entered 



» Evidence, Special Railroad Committee, p. 248. 
» Ibid., p. 339. 



3 Ibid., p. so. 
* Ibid., p. 64. 



» Ibid., pp. 104, 105. 

• Report of tJie Railroad Commissioner, pp. 63, 65, 1885. 



* Ibid., p. 66, 1885. 




40 



XJNIVERSITY OF COLORADO STUDIES 



the field, the railway manager could not fail to see that the interest of 
his company would not be advanced by his staying in the markets as 
a commercial trader and antagonizing the patrons of his road.' The 
difficulty with the situation in 1885 was the monopoly of the business 
by the railroads and their affiliated dealers so that private capital was 
discouraged from going into the business. As a result of this situation, 
the high price of this most essential commodity had a depressing effect 
on the minds of those persons who were considering the establishment 
of new manufacturing plants in the state. 

» Report of ike Railroad Commissioner, p. 66, 1885. 






I ■'■ 



« 



Chapter III. Testimony of Railroad Officials 

The true attitude of the railroads toward the growth of manufacture 
in Colorado during this period is perhaps most clearly shown by the 
statements of the freight agents before the investigating committee of 
1885. The freight agent of the Santa Fe testified that the rate on 
freight from Denver to points in New Mexico was uniformly more than 
the rate from Kansas City. He said it averaged 40 per cent, more on 
goods made in Colorado. The rate was uniformly more to Denver and 
from there to destination than was the case if the freight went through 
direct. The then existing rates were not published in the rate sheet, 
but were gotten up in a hektograph form and distributed among some 
of the shippers. The date of the sheet exhibited to the committee 
was January i, 1882. It showed a pronounced discrimination against 
Colorado manfacturers. These rates applied on jobbing business.' 
They were as follows: 

DISCRIMINATION AGAINST COLORADO MANUFACTURERS 

Furniture made in the East I 

" " " Colorado 

Fourth class goods made in the East 
" " " " " Colorado 
First class goods made in the East 
" " " " " Colorado 
Fourth class goods made in the East 
" " " " " Colorado 
First class goods made in the East 
" " " " " Colorado 
Fourth class goods made in the East 
" " " " " Colorado 

Iron made in the East 

" " ^' Colorado 
Nails made in the East (car lots) 

" " " Colorado 

> Evidence, Special Railroad Committee, pp. io6, 107. 

41 



ebk 


) to Albuquerque 


^1^1.40 


(( 


« « 


2.15 


a 


U It 


115 


Cl 


li it 


1.47 


it 


" Socorro 


1.6s 


(( 


U It 


2.50 


(( 


i( (( 


1-35 


<< 


<( <( 


1.70 


tt 


" Deming 


2. IS 


11 


(( << 


3.20 


<( 


(( It 


1-75 


(( 


(( (( 


2. 12 


11 


" Socorro 


1-35 


tt 


H 11 


1.70 


tt 


tt tt 


115 


tt 


tt tt 


1.60 






■ ■ » ' m 



42 



UNIVERSITY OF COLORADO STUDIES 



\ 



The freight rate was usually from 50 per cent, to 75 per cent, more 
from Denver to points in Arizona and New Mexico than from Kansas City 
600 or 700 miles farther distant. Much the same situation prevailed 
with regard to the freight rates from Omaha. ^ These rates show that 
the man with the capital to invest in manufacturing enterprises would be 
driven out of Colorado and would probably locate his factory at some 
point on the Missouri River. 

From the railway point of view some light is shed on the above table 
of rates by the testimony of Mr. Hamblin, the general freight agent of 
the Santa Fe. He stated that the rate tariff was made the last of 1882 
or early in 1883, and that according to this tariff, the rates were as 
shown in the table. The aim of the railroad at that time was to increase 
its revenues. Since January, 1884, Mr. Hamblin said this tariff had not 
been in use. Formerly, however, this road had discriminated against 
goods made in Colorado and was not anxious to encourage manufactures 
there. He verified the statements of Mr. Davis concerning the purchase 
of the hoisting engine. The freight rate on this machinery was higher 
if the article was made in Colorado.^ In explanation of the desire of the 
railroad to prevent the growth of manufactures in the state, Mr. Hamblin 
said the Santa Fe was at that time getting 19 per cent, of the business of 
the Colorado pool, " and of course, controlling all of that line from Kan- 
sas City clear down here, we naturally wanted to make as much money 
as we possibly could and we made a distinction between manufactured 
articles and those that we shipped in."^ 

Mr. Hughes, trafl&c manager of the Rio Grande, stated that the 
freight rates were made before there were any manufacturers in the 
state, and that it was the desire of the railroad companies to bring in 
manufactured products cheaply enough so that people could live in 
the Rocky Mountain region. The railroads tried to favor the con- 
sumer rather than stimulate manufacturers. He said there was some 
justice in the complaints that were at that time made by the persons 
desiring to start manufacturing in Colorado, and that his railroad was 



« Evidence^ Special Railroad CommiUee, p. 107. 
• Ibid., p. 254- See supra, p. 25. 



3 Ibid., pp. 254, 255. 



FREIGHT RATES AND MANUFACTURES IN COLORADO 



43 



X 



willing to make a difference between the rate on the raw material and the 
manufactured product. He thought that if coal, coke and iron were 
abundant in the state the policy of the railroads toward manufactures 
might be changed. His road was not willing to haul in everything needed 
in manufacture and thereby allow manufactures to develop in the state 
by keeping up the price of the finished article. 

In 1882, the Colorado Coal and Iron Company began the manufac- 
ture of nails. Immediately thereafter, the Union Pacific lowered the 
rate on nails from the Missouri River. Prior to their manufacture in 
Colorado, the rate had been $i . 25; it was reduced to one dollar as soon 
as the Coal and Iron Company began to turn out this product. There 
was likewise a lowering of the rate on everything the company turned 
out as soon as they began the process of manufacture. Mr. Shelby of 
the Union Pacific testified that this lowering of the rates was true. He 
said there had been some "isolated cases. "^ In the spring of 1884 a 
large territory was opened up to the Coal and Iron Company on account 
of a change in the freight rates which allowed the company to compete 
with the eastern dealers in the country north and west of Denver. The 
company was able in January, 1885, to ship its products to George- 
town, Central City, Idaho Springs, Erie, Greeley, Boulder and other 
points which were inaccessible to it ten months previous to the beginning 
of the year 1885. The iron ore used by the company in this manufac- 
ture was a Colorado product which came from the mines at Calumet 
and Villa Grove.* Mr. Hughes stated that the Union Pacific had 
formerly had a rate from the Missouri River to Salt Lake that was the 
same as the rate from Denver to Salt Lake, but when the new pool was 
formed and the rates restored, the Rio Grande had obtained a con- 
cession that the rates from Colorado points to Salt Lake should be 
something like 70 per cent, of the rates from the Missouri River to 
Utah. In consequence of this, the Colorado Coal and Iron Company 
was selling nails all over Utah and doing the entire business there. After 
this pool went into operation, the rate on nails from the Missouri River 
to Utah was $1 . 50 while from Pueblo, it was ninety cents.^ 



* Ibid., p. 223. 



'Ibid., pp. 218, 219. 



3 Ibid., pp. 191, 193. 






I 



44 



UNIVERSITY OF COLORADO STUDIES 



The reasons for the reduction in the freight rate so as to enable the 
company to sell in the above district and in Utah were due to the activity 
of the Rio Grande which was friendly to the Coal and Iron Company as 
stockholders of the railroad were largely interested in the company, 
owning half of its stock. When the pool was formed, they insisted upon 
a readjustment of the rates by the Union Pacific so that the company 
might be able to sell its products in a larger territory. 

The origin of the Colorado Coal (Fuel) and Iron Company at least 
as far as it has become a factor in the manufacturing industry of the 
country is due to its reliance upon railroad assistance. Had it been 
deprived of the close relation with the railroad interest, it is very doubt- 
ful whether or not it would have been able to grow into the great manu- 
facturing concern it has become. 

About 1873, the Rio Grande railroad was built into Pueblo. General 
Palmer, the builder, got into difficulty when the road had reached 
this city and found himself short of funds. He wished to build the road 
from Pueblo to Canon City, a distance of 42 miles. The Colorado 
Coal and Iron Company had many coal and ore lands in the vicinity 
of Canon City which they wished to develop. The Coal and Iron Com- 
pany, therefore, raised the money needed to build the road to Canon 
City, taking in exchange therefor the stock of the railroad. In this way 
the road was successfully extended to that point. In a similar fashion, 
another company bought up the coal and iron lands around Trinidad, 
Huerfano and some other points, and then turned over one half of 
their interests to the raikoad and on these properties, the funds were 
raised with which the railroad was built to Trinidad. In 1880 or 1881, 
in order to develop the resources along the road. General Palmer got 
the men interested in these properties, both at Trinidad and at Canon 
City, to put up capital for a steel plant at Pueblo. All the companies 
were consolidated into the Colorado Coal and Iron Company. About 
$2,500,000 was expended at that time. The two contracts which had 
formerly been made by the railroad by which special favors were granted 
to the companies in the matter of freight rates were then consolidated into 
one contract with the combined company. This contract extended spe- 



FREIGHT RATES AND MANUFACTURES IN COLORADO 



45 



^ 



^ 



>. 



cial favors to the company in the matter of freight rates as the company 
had united with Palmer in the development of the coal and ore beds and 
was therefore entitled to a good bargain. This is why, according to the 
evidence of the receiver of the Rio Grande, no other companies were 
allowed to sell coal in Leadville except the Colorado Coal and Iron 
Company.^ This also explains why the above company shipped coal 
from Coal Creek to Pueblo at two dollars less a ton than could other 
shippers at Canon City. The discrimination was even greater than two 
dollars ordinarily at that point.* This is also sufficient to explain the 
refusal of the Rio Grande to furnish cars to the other companies even 
though a number of the cars desired were at that time standing empty 
on the side track.^ 

Concerning the railroad attitude toward manufactures in Colorado 
Mr. Shelby, the general freight agent of the Union Pacific, said : 

It would be to the interest of the Union Pacific Company to so adjust their 
rates between the Missiouri River and those Colorado central points, as to make 
it to the interests of the merchants at these points or at the Missouri River, but 
when you come to go a step further, you will see that would turn the jobbing mer- 
chant of Denver against us, if we were to pursue that policy; so from a business 
standpoint, we find it to our interest to so adjust our rates as to give the Denver 
merchant the benefit of dealing with all the merchants in Colorado. There may 
be some few instances where this plan is not lived up to.* 

A number of wholesalers had already shown that this plan was not 
generally lived up to. In theory the rate to the points in central Colo- 
rado was the rate to Denver, plus the local rate, but a number of instances 
are recorded where the dealer in the interior of the state got the same rate 
as the Denver dealer. As far as the manufacturer was concerned, Mr. 
Shelby said the Union Pacific was willing to make the freight rate 
on raw materials 90 per cent, of the rate on manufactured articles in 
order to encourage manufactures in Colorado. ^ 

As to the general question of freight rates from the East to the Rocky 
Mountains, it is clear that very great pressure was brought to bear on 



' Evidence, Special Railroad Committee, p. 206. 

* Ibid., p. 19; Colorado Daily Tribune, January i, 1885, 

3 Evidence, Special Railroad Committee, p. 67. * Ibid., p. 340. 



s Ibid., p. 228. 



^6 UNIVERSITY OF COLORADO STUDIES 

the railroads by the manufacturers of the eastern states to induce them 
to keep the rate favorable for the shipment of eastern articles to that 
region. It was not a matter of purely selfish interest on the part of the 
raib-oads alone ; whatever selfish interest in the matter they may have had 
was greatiy reinforced by a similar interest on the part of the eastern 
manufacturers. This is made vividly apparent by the testimony of 
Mr. Daniels who was at that time the official charged with the adminis- 
tration of the Colorado pool. Repeatedly during 1884, and even as late 
as the month of January, 1885, the railroads were requested by manu- 
fecturers in the East to lower the rates on manufactured goods shipped 
to the Rocky Mountain region. The reasons stated in these petitions 
were that the eastern dealers and manufacturers were losing trade in 
Colorado on account of the growth of manufactures there. The pool 
commissioner, Mr. Daniels, said the roads refused to do this as they 
felt that in the end reasonable protection to the manufacturers of Colo- 
rado would increase the profits of those engaged in the transportation 

business. 

On January 4, 1885, a meeting of the general freight classification 
committee was held in St. Louis. At this meeting a number of con- 
cessions were made to Colorado manufacturers. Wagon wood was 
reduced from class A to class B so as to promote the manufacture 
of wagons in Colorado. Iron bridge material which had been for 
some years in class B was advanced to class A. This was protecting 
the Colorado iron manufacturer. A petition from important shippers 
was presented to the classification meeting asking for a reduction of 
the freight rate on soap from the East to Colorado, and stating that 
soap was being made in that state. The Colorado roads protested against 
any reduction in this rate and the rate was not changed. A similar 
petition was presented from the manufacturers of matches asking for 
a reduction in the carload rate to Colorado and stating that matches 
were being made in the state, and in consequence, the market for east- 
erners was being destroyed. This request was also opposed by the 
Colorado railroads and the rate was not changed.^ 

It was also shown by Mr. Daniels that the railroads, in August, 

« EvidemcCy Special Railroad Committee, pp. 265, 266. 









X 



FREIGHT RATES AND MANUFACTURES IN COLORADO 



47 



1884, had reduced the freight rates on the different classes of freight 
from the Missouri River to Colorado common points. These reduc- 
tions had been made on the demands of the business men of the leading 
cities. 

FREIGHT RATE REDUCTIONS FROM MISSOURI RIVER TO COLORADO 

ist class reduced from $2 . 40 to $2 . 10 a cwt. 
2d " " " " " 



3d 

4th 

5th 



<( 



(( 



« 



(( 



(( 



{( 



II 



2.00 

1-75 

1-35 
1.25 



(( 



<< 



It 



1.70 
1.40 

IIS 
1. 00 



(( 



(( 



(( 



It was said that these reductions were very nearly and in some cases 
"quite the rates" asked by the shippers. Mr. Daniels said this was 
evidence of the attitude of the railroads on the freight rate question.' 

On January 30, 1885, a circular was sent out by the Denver chamber 
of commerce and board of trade containing a letter which had been 
addressed to the president of that body three days before by the officials 
representing the railroads of the state. The circular of the chamber 
of commerce aimed to call the attention of the world to Colorado as a 
desirable place for the establishment of manufacturing enterprises. It 
contains the following: 

"Many persons in failing health in the eastern states familiar with 
manufacturing and desiring to establish their particular industries here 
so as to secure the benefit of our wonderful climate, have hesitated from 
fears of railroad opposition. The subjoined letter clearly proves that 
the railroad companies themselves want this idea eradicated."* 

At the meeting of railroad officials at which it was decided to issue this 
letter to the president of the chamber of commerce, all the railroads in 
the Colorado pool were represented. The general traffic manager, and 
general freight agent of the Union Pacific, assistant general manager, 
and general freight agent of the Burlington and Missouri River, the 
traffic manager of the Santa Fe, the traffic manager of the Rio Grande, 
and Mr. Daniels, the commissioner of the Colorado Railway Association, 
were present. The letter is as follows: 

' Ihid., p. 267. 
Ihid., p. 264. 




48 



UNIVERSITY OF COLORADO STUDIES 



IMPORTANT TO MANUFACTURERS 

Colorado Railway Association 
Union Pacific Railway 
Burlington and Missouri River Ry. 
Atchison, Topeka and Santa Fe Ry. 
Denver and Rio Grande Ry. 
Denver, South Park and Pacific Ry. 

Office of the Commissioner 

Denver, Colo,, Jan. 27, 1885 
R. W. Woodbury, Esq., President of the Denver Chamber of Commerce and Board 

of Trade, Denver, Colo.: 

Dear Sir: I am instructed by the managers of the lines, members of the Colo- 
rado Railway Association, to say to you that they will be glad to use every means 
within their power, consistent with a broad commercial policy, to encourage manu- 
factures in Colorado and to foster and build up her home institutions; and to this 
end they will be pleased at all times to meet through their representatives, com- 
mittees of your association or others for the purpose of discussing means for the 
advancement of such interests, believing as they do, that the interests of the people 
of the state of Colorado and of the railroads, members of this association, are largely 
identical, and that whatever legitimately advances your interests must advance the 
interests of these railways. The association invites, through your Chamber of 
Commerce, the attention of manufacturers of the United States to the natural advan- 
tages of the Rocky Mountain country for the establishment of industrial enterprises.^ 

^ In the light^of what happened in the years succeeding the issue of 
this circular, it has been said that it was not issued in good faith. This 
would probably be hard to prove. It is true it was issued at a time when 
an investigation of the freight rate question was being conducted by a 
legislative committee and the fear of adverse legislation might have had 
some influence on the minds of the railroad managers. However this 
may be, it is certain that the high promises concerning the establishment 
of manufactures in Denver and Colorado generally that are apparently 
embraced in the provisions of the letter were not fulfilled by a favorable 
adjustment of freight rates. 

» Second Annual Report of Chamber of Commerce, 1884-85, p. 21. 



4\> 






A 

^ 



r, 



Chapter IV. 1885-1896 

Notwithstanding the fair promises held out in the letter of the pool 
commissioner to the president of the Denver chamber of commerce, the 
disadvantageous freight rates of which the shippers complained were 
not generally readjusted. The legislative committee worked up con- 
siderable public sentiment by their investigation and as a result of it the 
legislature passed a law providing for the appointment of a railroad 
commissioner. The law was approved April 6, 1885.^ The commis- 
sioner displayed considerable activity and published a creditable report 
covering the year 1885. No report was published for the year 1886 as 
there was no appropriation to pay for it.^ No future appropriations 
were made to pay the salary of the commissioner. It has been said that 
the railroad lobby defeated the appropriations and finally compelled 
the repeal of the law in 1893.3 Whatever was the attitude of the rail- 
roads in this matter, it does not appear that their rate policy was changed. 
There is abundant evidence that very little had been done to encourage 
manufacturers by favorable freight rates during the period from 1885 
to 1896. 

The following is taken from the address of the president of the Denver 
chamber of commerce delivered in January, 1886: 

• Your directory is unwilling to believe that Denver, a city aspiring to become 
a commercial, manufacturing and distributing centre, advertising itself to the world 
as such, can aquiesce in and much longer continue a condition which is delaying its 
natural growth and development of business year by year. It is useless to say that 
freight charges in and out of Denver, are so because of so and so. The fact remains 
that Denver, amongst many characteristics, enjoys or seems to prefer the distinction 
of being the highest charged town in the country.* 

» This act was supposed to give the commissioner sufficient power over rates to prevent discrimination 
though it did not say he had the power to make rates. It empowered him to have compulsory process to 
secure the attendance of witnesses, obtain books, papers etc. in the investigation of railroad affairs. 

» A small report — 21 pages — covering the years 1891-92 was published in 1893. 

» The repealing act was vetoed by the governor, but passed both houses, March 30, 1893, by a two- 
thirds vote and so became law. It was given effect in these words: "Inasmuch as the public interest requires 
that this act should take effect at once, an emergency exists requiring this act to take effect immediately; there- 
ore this act shall take effect and be in force from and after its passage."— 5«5kw Laws of Colorado, 1893, 
chap, cxxxvi. 

* Report of the Chamber of Commerce, Denver, p. 7, 1896. 

49 




so 



UNIVERSITY OF COLORADO STUDIES 






Again in a similar address some years later is the following: 

It is not possible that the railroads centering here can much longer ignore the 
importance of the enormous tonnage, but must see that it is to their interest to give 
to our manufacturers and jobbers a freight rate that will permit of the distribution 
of goods to a much greater distance than they now enjoy. In fact each year the 
dealeis have to cut the profits to hold their trade to far distant points. Yet with the 
discriminations by the railroads in favor of cities located on navigable waters, the 
tonnage continues to develop, and when they see fit to foster the manufacturers and 
give to them equal rates with those located to the east, Denver will be the most 
important dty between Chicago and San Francisco.^ 

An illustration of the attitude of the railways toward the development 
of manufactures appears in the testimony of Professor Ripley and Mr. 
Kindel before the United States Industrial Commission. During the 
years 1890-92, a number of men had planned to build a pulp- and paper- 
mill in Denver and use the raw materials of that section to manufacture 
paper for the newspapers that circulate in the Rocky Mountain region. 
In this way it was thought the great expense of shipping this commodity 
a thousand miles might be avoided. Plans were under way when the 
attention of one of the railroads was called to the matter, and the officials 
of the railroad informed the promoters that if a paper-mill was built in 
Denver, and thereby the shipment of paper from Wisconsin interfered 
with, the railroads would kill the enterprise at any cost to themselves. 
This they threatened to accomplish by lowering the freight rate on paper 
from the East. The promoters were greatly discouraged, but as the 
freight rate was very high, they decided to build the mill. Plenty of 
timber was available in the near-by mountains. Coal mines were in 
active operation within twenty miles of Denver. The promoters thought 
there was every reason to believe the mill would succeed owing to the 
great expense of hauling paper 1,000 miles from Wisconsin. The rate 
on incoming paper had been $1 . 55 a hundred, and the complaints about 
the high rate had been one of the leading causes that had led to the erec- 
tion of the mill. As soon as the mill went into operation, the railroads 
reduced the rate on incoming paper to $0.25 a hundred. The profits 
of the enterprise were greatly cut down and the mill finally closed.^ 

» Report of the Chamber of Commerce, Denver, p. 57. iSpS- 

•Report of the Industrial Commission, Vol. IV, p. 264, 1902; ibid.. Vol. IX, p. 287. 



%* 

fr 



FREIGHT RATES AND MANUFACTURES IN COLORADO 



SI 






Whether or not the closing of the mill was due entirely to the low rate 
on incoming paper is not important in this connection. The incident 
is important as showing the disposition of the great traction interests 
toward the development of an industry which was likely to reduce their 
profits from freight haulage. 

Under the schedule of freight rates in force in 1894, Chicago and 
St. Louis manufacturers could ship mining machinery and supplies to 
points in New Mexico and Arizona "a great deal cheaper" than the 
same class of goods could be laid down from Denver. It was said that 
as a matter of fact this was the case with all kinds of manufactured ar- 
ticles. The freight tariff at that time was prohibitory and closed Mexico 
to Colorado manufacturers and jobbers. As a general rule the rates 
were the same from Omaha to Denver and to Salt Lake although the 
latter point was 800 miles farther west. The result of all this was that 
the Colorado shipper was at the mercy of the eastern manufacturer. 
Chicago was closer to New and Old Mexico than was Denver. This 
is one of the ways in which the railroad annihilates space. Manufac- 
turers of mining machinery in Denver stated that were that city placed 
on an equal footing with the other centres, they could increase their 
trade threefold within a year. Even as it was, the enterprise of the 
local manufacturer had in some degree overcome the hardship imposed 
by the railroad discrimination.' 

On August 17, 1896, the Citizens' League of Arapahoe County 
adopted a resolution declaring that railroad discrimination had retarded 
the development of the resources, crippled manufactures and diminished 
the commerce of the state to a point below the volume it had attained 
in 1884. The resolution also demanded that a promise be exacted from 
all candidates for the legislature that they would use their best efforts 
to enact laws for the establishment of an efficient state railroad commis- 
sion with power to prevent unjust discriminations and charges. =" Per- 
haps some allowance should be made for other causes which had reduced 
the commerce of Colorado at the time this resolution was adopted. The 
closing of the silver mines between 1893 ^-nd 1896 was an important 

« Denver Republican, January i, 1895. 
• Ibid., August 18, 1896. 




^ 



!^ 



5t UNIVERSITY OF COLORADO STUDIES 

factor in bringing on the depression which prevailed during the latter 
year. However, the resolution shows that the freight rate discrimination 
was felt to be a serious grievance. 

On May 21, 1896, the Denver chamber of commerce adopted a 
resolution stating that Colorado industries were subject to extortionate 
and discriminative transportation rates, and that these rates had reduced 
the volume of business in many lines below that of 1884. The resolution 
also provided for the appointment of a committee of three to solicit 
money to carry on the fight for fair freight rates. ^ 

It is thus apparent that in 1896 the freight rates were complained of 
by the most prominent business organizations and the newspapers. 
Whether or not there was justice in these complaints of the shippers can 
be determined by an examination of the rates themselves. The following 
table gives the conmiodity rates in force in 1896, Chicago to CaHfomia 
and to Colorado. A glance is sufficient to show that everything was 
charged more if it stopped in Colorado than if it went on through to the 
Coast. 

Transcontinental Commodity Rates, 1896* 



Boots and shoes 

Burial cases 

Carpets 

Carpet linings 

Cash rq^isters 

Clothing 

Coffee (roasted and ground) 

Chocolate L. C. L 

Dry goods 

Drugs and medicines 

Earthenware (plumbers') 

Glass (plate) 

Glass (colored, decorated etc.) 

Hair (compressed, etc.) 

Hardware 

Hose (garden) 

Iron and steel (bar, road, hoop etc.). 

Iron and steel (boiler and plate) 

Iron pipe 



Chicago to California 


Chicago to Colorado 


Terminals. Average 


Common Points. Aver- 


Distance 2,500 Miles 


age Distance 1,000 Miles 


$1.50 


$2.05 


1.50 


3 07 J 


1-75 


2.05 


1.50 


2.05 


2.40 


4.10 


1.50 


2.05 


.80 


I. 25 


1.50 


2.05 


1. 00 


2.05 


1 .20 


2.05 


1. 00 


1 65 


1.50 


6.15 


1.50 


6. IS 


1 .00 


2.05 


1. 00 


1.65 


1. 00 


2.05 


•50 


•77 


.60 


•77 


•50 


•77 



.4- 



t 



\^ 



% 



FREIGHT RATES AND MANUFACTURES IN COLORADO 
Transcontinental Commodity Rates, 1896 — Continued 



53 



Iron (roofing and corrugated) 

Iron horseshoes 

Iron bale ties 

Japanned ware 

Mats (rubber) 

Miners' leather-lined clothing 

Money-drawers 

Mustard 

Mackintoshes 

Nails and spikes 

Nuts (edible) 

Oilcloth (floor) and linoleum 

Paint 

Paper hangings 

Rubber clothing 

Rattan and willow furniture 

Spices 

Screens (foundry) 

Sewing machines 

Shoe findings 

Slates (school) 

Starch 

Stair pads 

Sweaters 

Shirts 

Stoves (gas, oil etc.) 

Tin (pig or bar) 

Tiling (art, decorated or inlaid) 

Tapioca 

Tobacco (smoking or cut plug, baled) 

Tobacco in barrels, boxes or kegs 

Toys 

Type 

Varnish 

Wax (for sealing canned goods) 

Window shades 

Water closets 



Chicago to California 
Terminals. Average 
Distance 2,500 Miles 



Chicago to Colorado 
Common Points. Aver- 
age Distance 1,000 Miles 



•77 
■57 
•57 
•05 
•05 
■05 
•05 
65 
05 
■57 
■15 

05 
1.65 

2.05 

2.05 

6.15 
2.05 

2.05 

2.05 

05 
OS 

25 

OS 

05 

05 

05 

65 

05 

65 

05 

65 
2.05 

1.65 
2.05 
2.05 

2.05 
2.05 



2 
2 

I 
2 
2 
2 
2 
I 
2 
I 
2 
I 



The following table shows the commodity rates from the California 
terminal points to Colorado and also to the Missouri River. The same 
characteristic feature appears as in the other table. It cost more to ship 
to Colorado than to points on the Missouri River. 



* KofDEL, A B C of Freight Rates, Denver, p. 17, 1896. 
1 KiNDTX, ibid,, p. 9. 





54 



UNIVERSITY OF COLORADO STUDIES 
Transcontinental Commodity Rates, 1896* 



-V 



w 



Agricultural implements. 

Brushes 

Blankets 

Chocolate 

Sugar 

Dnigs and medicines . . . . 

Hides (green) 

Honey 

Ink 



Lard and substitutes 

Machinery, class A 

Oilcloth (floor) and linoleum. 

Paint (earth and mineral) 

Rice 

Soap. 



Skins, Russian sable, silver fox, sea otter and 

blue fox 

Martin, fisher, cross fox and white fox 

Bear, beaver, otter, mink, lynx and red fox . 
Deer, raccoon, muskrat, squirrel, reindeer etc . 



* KiNDEL, op. cit., p. 24. 



California Terminals to 

Kansas City, St. Joseph 

and Omaha, 2,157 

Miles 



1 .20 
1.50 
1 ,00 

•50 
1 .20 
1. 00 

•75 
1. 00 

1. 10 

1. 10 

•75 
•75 
•50 
•75 

350 
3.00 

2.80 

2.50 



California Terminals to 

Pueblo, Colorado Springs 

and Denver, 1,545 

Miles 



$1 .40 
2.20 
2.50 
2.20 

•75 
3.00 



30 
10 

00 

30 
40 

90 

00 

1. 00 

.82 



6.00 
6.00 
6.00 
3.00 



.# 



Colorado was under similar disadvantages when it came to shipping 
goods out of the state. It did not seem to be the scheme of the man who 
made the rates to allow Denver to be a distributing point. The follow- 
ing tables giving the freight rates from Colorado cities to certain points, 
and also the rates from other cities to these same points, show that it 
generally cost more to ship from Colorado than from other cities even 
though in the latter case the haul was often much longer. 

First Class Rates, 1895* 

New York to San Francisco 

Chicago to San Francisco 

New Orleans to San Francisco 

Omaha to San Francisco 

Denver to San Francisco 



7 



Omaha to Salt Lake. 
Denver to Salt Lake. 



Chicago to El Paso. 
Denver to El Paso . . 



$1 


.00 


I 


.00 


I 


.00 


I 


.00 


3 


.00 


I 

I 


•65 
65 


I 


62 


2 


00 



• KiNDEL, op. cit., p. 53. 






^ 



V 



FREIGHT RATES AND MANUFACTURES IN COLORADO 



First Class Rates, 1895 — Continued 



55 



Omaha to Julesburg, 
Denver to Julesburg . 



Kansas City to Haighler, Neb. 

Omaha to Haighler, Neb 

Denver to Haighler, Neb 



Missouri River to Chappell, Neb. 
Denver to Chappell, Neb 



Missouri River to Rock Springs, Wyo. 
Denver to Rock Springs, Wyo 



$1.00 
.87 

.89 

.84 
.87 

1. 01 
1-25 

1.65 
1-65 



A slight advantage in rates was given to Denver over Missouri River 
points in shipments to other places in Wyoming.' 

Discrimination in Favor of Missouri River Points, 1896* 



Commodity Rates 



Acid 

Agricultural implements 

Babbit metal 

Blue vitrol 

Boots and shoes 

Bottles (glass) 

Boxes (paper) 

Brass goods 

Brooms 

Brushes (shoe, scrub, stove) 

Cans (tin) 

Cars (street) 

Car seats and backs 

Cheese 

Chimneys and lantern globes (glass) 

China 

Clothing, overalls 

Coffee (roasted, ground) 

Copper goods 

Crockery and queensware 

Drugs and medicines 

Dry goods 

Filters (stone) 

Flasks (glass) 

Fuel (composition) 

Fuse 

Glass (window) 

* KiNDEL, op. cit., p. 23. 

* Ibid., p. 16. 



Omaha, Kansas City 

and St. Joseph to 
California Terminals 



$0.90 
I. OS 

•75 

•75 

I 50 

•65 

1. 00 

1 .00 

^•95 
1 .20 

•75 

1-35 
1.45 
1-65 

.90 
1 .00 
1.50 

.80 
1 .00 

•85 
1 .20 

1.50 

1 .00 

•65 
1 .00 

1 .20 
.65 



Denver, Colorado 

Springs and Pueblo to 

California Terminals 



Pl.40 
1 .40 

1-75 
1 .60 

3.00 

1 .60 

6.00 

2.60 

3.00 

3.00 

1.60 

1 .40 

3.00 

2.60 

2.00 

3.00 

3.00 

2.00 

2.60 

I .60 

3.00 

3.00 

1-75 
1 .60 

2.00 

3.00 

1.60 





\ \ 



56 



UNIVERSITY OF COLORADO STUDIES 



FREIGHT RATES AND MANUFACTURES IN COLORADO 



57 



Discrimination in Favor of Missouri River Points, 1896 — Continued 



Commodity Rates 



Glassware 

Grates (iron) 

Hosiery 

Hardware 

Ink 

Jars and glasses (glass) 

Lamps (glass) 

Lead pipe 

Machinery (class A) . . . 

Matches 

Mining car wheels .... 

Pickles 

Pipe (sewer clay) 

Solder 

Soap 

Tinware 



Omaha, Kansas City 

and St. Joseph to 
California Terminals 



5 .85 
1 .00 
1 .20 
1. 00 
1 .00 

•6s 
1 .00 

•75 
1. 10 

1 .00 

1. 00 

.90 

•65 
1 .00 

•75 
•75 



Denver, Colorado 

Springs and Pueblo to 

California Terminals 



$2.00 
1 .40 
3.00 



00 
00 
60 
00 
60 
40 

75 

75 
60 

.80 

2.00 

.82 

1-75 



Peculiarities of Freight Rate Discrimination, 1896* 

Rate 
Beer — 

Denver to Leadville, 151 miles $0.60 

St. Louis to Leadville, 1,000 miles .70 

Denver to La Junta, 180 miles .37 

Kansas City to La Junta, 571 miles .30 

Plate glass: commodity rate — 

Chicago to Denver i .25 

Chicago to San Francisco i.io 

Single large plates — 

Chicago to Denver , 6. 15 

Chicago to San Francisco 1.50 

Chocolate — 

Boston to Denver, water and rail 2 . 29 

Boston to Denver, all rail 2 .60 

Boston to San Francisco i • 00 

Machinery: class A — 

Chicago to Denver i -40 

Chicago to San Francisco i • 10 

• Kdtoel, op. cit., pp. 24. 37- 



I 



fi 



') 



^ 



Oil— 

Chicago to San Francisco .78^ 

Colorado common points to San Francisco .96 

Pickles — 

Chicago to San Francisco .90 

Denver to San Francisco i . 60 

Soap — 

Chicago to San Francisco -75 

Chicago to Denver .77 

Denver to San Francisco -82 

Freight Rates, Denver to San Francisco, 1896* 



Chicago to San Francisco. 
Denver to San Francisco. 
San Francisco to Denver. 



ist Class 



$2.40 
3.00 

3 



00 



2d Class 



$2.15 
2.60 
2.60 



3d Class 



$2.00 
2.00 
1 .90 



4th Class 



$1.70 
1-75 
^•55 



5th Class 



?i.65 
1 .60 
1.30 



* Kdtoel, op. cit., p. 36. 



The following table of rates shows the impracticability of carrying 
on the jobbing business in Denver under the discriminations prevailing 
in 1896. Shale is a town on the Rio Grande Railway 28 miles west of 
Grand Junction. 

Chicago to Omaha $0.80 



Omaha to Shale. 



$2 

Chicago to Denver $2 

Denver to Grand Junction i 

Grand Junction to Shale 



$4 
Denver jobber's rate in excess of Omaha's $1 



65 



45 
OS 
75 
35 



15 

70 



By 1895 the jobbing business in Colorado had not reached any appre- 
ciable development, most of the jobbers supplying the state having found 
it more profitable to locate at the Missouri River.' 

The rate on cash registers illustrates likewise the same disadvantages 
of the jobber at that time.* 

» Ibid., p. 14" 
• Ibid., p. 37. 




^ UNIVERSITY OF COLORADO STUDIES 

Cash Registers 

Chicago or Kansas City to San Francisco $2 . 40 

Chicago to Denver 4- 10 

Denver to San Francisco 6.00 

Denver to Grand Junction 3-5o 

Denver to Salt Lake 33° 

Some time previous to August, 1896, Messrs. Grove & Pryor, jobbers 
of hats and gloves in Denver, shipped 600 pounds of gloves frona San 
Francisco. On receipt of them, they discovered that some mistake 
had been made in fiUing their order and immediately returned the gloves. 
They were much surprised to find the rate on gloves was, San Francisco 
to Denver, 600 pounds at $2.00 a cwt., $12.00; return, Denver to San 
Francisco, 600 pounds at $3.00 a cwt., $18.00.' 

In a number of instances, there was in 1896 a discrimination against 
manufactures in Colorado by a higher freight rate on raw material than 
on the manufactured goods. This is quite apparent from the rate on 
material used in the manufacture of mattresses. 

In 1883, the railroads first took notice of the manufacture of excelsior 
in Colorado. At that time the rate from the Missiour River to Denver 
was $1 .40 a cwt. After the manufacture of excelsior was well begun, 
the freight rate was reduced to fifty cents a cwt., the same as the rate on 
cord wood.^ The unfavorable freight rate which began in 1883 was still 
in force in 1895. Manufactured mattresses were charged more than 
the raw material as appears from the following table: 



100 pounds of curled hair in sacks, Chicago to Denver $4. 10 

15 pounds of ticking, Chicago to Denver 



1 15 pounds of mattresses m a car of furniture, Chicago to Denver i 
Raw material in excess of manufactured goods $3 



25 



35 
26 



09 



Mattresses are worth at least 10 per cent, more than the raw material 
on account of the added labor. A grease spot wiU injure a manufac- 



« KiMDEL, op. cit., p. 37. 
• Hid., p. 54- 




I. 






h, 



\ 



I 



K 




FREIGHT RATES AND MANUFACTURES IN COLORADO 59 

tured mattress, but hair in sacks is not likely to be injured very much 
in transportation. The effect of these rates on the mattress industry 
in Denver is shown by the fact that when the Brown Palace Hotel was 
built in that city, the hotel company bought 20,000 pounds of curled 
hair mattresses, and at that time the freight rate was so adjusted that 
had the company bought the raw material and had it shipped in 
and manufactured in Denver, the difference in the freight rate alone 
was so great that it would have added $800 to the cost which the 
company had to pay for the mattresses already manufactured in the 

East and delivered.' 

The same disadvantage appeared at that time when Denver was con- 
sidered as a distributing point. The Missouri River cities were favored 
by the rates.* 

100 pounds of moss. New Orleans to Omaha $0 . 59 

15 pounds of ticking, Chicago to Omaha 07^ 

o . 66 J 

115 pounds of mattresses, Omaha to Trinidad i -43 

Total ^2-^ 

100 pounds of moss, New Orieans to Denver $1 • 59 

15 pounds of ticking, Chicago to Denver 26 

$1.85 

115 pounds of mattresses, Denver to Trinidad 82 

Total ^^-^7 ^ 

Difference in favor of Omaha ^-58 

A Study of freight rates from Denver to the various cities which served 
as the distributing centres of the country shows that these rates were 
considerably reduced on January i, 1895, and remained so reduced till 
November i, 1895. At the latter date they were raised somewhat though 
not to the level of the old schedule. The changes are shown in the fol- 
lowing table: 

» Ihid., p. 45. 
'Ibid. 




6o 



UNIVERSITY OF COLORADO STUDIES 



FREIGHT RATES AND MANUFACTURES IN COLORADO 



6l 



Rates from Denver and Colorado Common Points, 1896;* Reduced January i, 

1895, AND Advanced November i, 1895 



Cbss 


I 


a 


3 


4 


5 


A 


B 


C 


D 


E 


To 






















Chicago — 






















Old rate. . . . 


$2.32 


$1.90 


$1.52 


$1.20 


$1 .00 


$1.15 


$0.90 


$0.75 


$0.62j 


$0.56 


Reduced . . . 


2.00 


1-55 


1 .22 


•95 


•75 


•85 


.70 


.60 


•.S2i 


.46 


New rate . . . 


2.05 


1-65 


1-25 


•97 


•77 


.92 


•72 


.62 


•53* 


.46 


Peoria — 






















Old rate. . . . 


2.22 


1.80 


1.47 


1.14J 


•97i 


.Hi 


.86 


•72* 


.60 


•53* 


Reduced . . . 


1.90 


1-45 


1. 17 


•92i 


•72i 


.8ii 


.66 


•57i 


•50 


•43* 


New rate . . . 


1-95 


1-55 


1.20 


•94i 


•74* 


.88i 


.68 


•59i 


•51 


•43 


Mississippi 






















River — 






















Old rate. . . . 


2.12 


1.70 


1.42 


i^i5 


•95 


1. 07 J 


.82J 


.70 


•57* 


•51 


Reduced . . . 


1.80 


1-35 


1 .12 


.90 


.70 


•77i 


.62 J 


•55 


•47* 


.41 


New rate . . . 


1. 8s 


1-45 


^•^5 


.92 


•72 


•84i 


•64* 


•57 


•48* 


.41 


St. Paul- 






















Old rate 


2^I5 


17s 


1.42 


I-I5 


•93 


1.07 


.83 


.70 


•59 


•52 


Reduced . . . 


1.80 


1 .40 


1. 12 


.90 


.68 


•77 


•63 


•55 


•49 


.42 


New rate. . . 


i^85 


1.50 


I-I5 


.92 


.70 


•84 


•65 


•57 


•50 


• 42 


Missouri 






















River — 






















Old rate 


1 .60 


1.30 


1. 10 


.90 


•75 


•85 


•65 


•55 


•45 


.40 


Reduced . . . 


^•25 


•95 


.80 


•65 


•50 


•55 


•45 


.40 


•35 


•30 


New rate . . . 


1-25 


1. 00 


.80 


•65 


•50 


.60 


•45 


.40 


•35 


•30 


Spohane, etc. — 






















Old rate.... 


2.80 


2.40 


2.00 


1 .60 


1.40 


1.40 


1.24 


1. 00 


.88 


.72 


Reduced . . . 


1.496 


1.32 


1 .29 


1. 16 


1.04 


1.04 


.712 


.648 


.624 


.56 


New rate . . . 


2.40 


2.08 


1.76 


152 


1.20 


1. 16 


1. 00 


.88 


.76 


.68 


Helena — 






















Old rate. . . . 


2.00 


1.72 


1.40 


1. 16 


1. 00 


.88 


•736 


.656 


•576 


•49 


Reduced . . . 


^■ZZ 


1 .20 


^•i3 


1 .04 


.96 


.88 


•67 


•59 


•.56 


.48 


New rate . . . 


2.00 


1.72 


1.40 


1.20 


1 .00 


•92 


.80 


•72 


.60 


•52 


Galveston — 






















Old rate.... 


2.07 


173 


I 37 


1.07 


.88 


1.04 


.80 


•65 


•52* 


•46 


Reduced . . . 


1-75 


1-38 


1.07 


.82 


•63 


•74 


.60 


•50 


•42* 


•36 


New rate . . . 


1.30 


I -13 


•97 


.90 


.70 


•74 


•65 


•54 


•43 


•36 


Galveston 






















to Denver . . 


1.80 


1.48 


1. 10 


.84 


•65 


.80 


.62 


•52 


•43* 


•36 



• KiNDEL, op. Cit., p. 37. 

The reasons for these changes are hard to understand. It 
may be that the railroads were experimenting to ascertain what 
the traffic would bear. Some have interpreted the readjustment of 
rates as a fresh attack on the manufacturing industries then starting 
in Denver. 

For some time before 1896 the rates discriminated heavily against 




% 



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1 



5i 



Y 



^x 



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I 

1" 



the manufacture of iron in Pueblo as is shown by the following table. 
They were lowered, however, in April, 1896.^ 



Rails (iron and steel) . . 

Iron (bar) 

Iron billets and blooms 

Iron (pig) 

Iron rivets 

Iron nails 

Iron pipe (cast iron) . , . 



April IS, 1895, Chicago 
to San Francisco 



$0.60 
.60 

•SO 
•50 
•50 
•50 
•50 



Same Date Pueblo to 
San Francisco 



h .60 
1 .60 
1 .60 

•85 
1.60 
1 .60 
1 .20 



Reduced April 28, 1896, 
Pueblo to San Francisco 



$0.45 

•37* 
•37* 
•37* 
•37* 
•37* 
•37* 



This reduction in rates was the result of a decision and order of the 
United States Inter-State Conamerce Commission made in November, 
1895, and providing that the rates from Pueblo to California should not 
exceed 75 per cent, of the rates from Chicago to California. This order 
the railroads refused to obey. Court proceedings were begun by the 
commission to enforce the order. Then the railroads obeyed and the 
rates were lowered as shown above. But this situation was not to last. 
They kept the rates down about two years, till October 17, 1898. Then 
the Southern Pacific increased the rates. The Colorado Fuel and Iron 
Company, on whose complaint the investigation and order was made, 
sued for damages and an injunction, October, 1898. The Circuit Court 
enjoined the railroads from charging more than the rates fixed by the 
commission. But April 16, 1900, the Circuit Court of Appeals reversed 
the decision on the ground that the United States Supreme Court had 
ruled that the commission cannot fix rates.* 

Notwithstanding a vigorous campaign by Denver shippers and manu- 
facturers to secure Missouri River commodity rates for Denver, they were 
denied and the following excuse was given by Mr. W. A. Poteet, secretary 
of the Southern Pacific Company, in a letter dated July 21, 1896. The 
statement is as follows: 

That it was not considered that the circumstances would justify the application 
of the transcontinental basis of rates to Denver and common points without making 

* Ibid., p. 12. 

• Inter-State Commerce Commission Reports, pp. 41-43, 1895; pp. 55-61, 1900; loi Fed. 779. 
The appeal to the Supreme Court was dismissed by stipulation, November 1901 (46 L. Ed. 1264); Parsons, 
Heart of the Railroad Problem, p. 92. 




N 



62 



UNIVERSITY OF COLORADO STUDIES 



the same basis applicable in surrounding territory and such action would be more 
apt to have an injurious effect upon the industries of Denver and other centers of 
trade in Colorado than would the continuance of the present rates.^ 

Since 1896 there has been much improvement in the attitude of the 
transportation companies toward the development of Denver as a manu- 
facturing and distributing centre, but as yet the freight rates are far from 
satisfactory and the evil effect of the old rates on the city's growth has 
not been obliterated. 

« Kjndel, op. cit., p. 35. 







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COLUMBIA UNIVERSITY LIBRARIES 



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APR 241994 

APR 2 8 1927 



END OF 
TIT